Wow, this one sucked! It dropped my SQL Service completely and ALL of my sites went offline (except for my blog here, which runs on XML - good job guys!).
The problem, it turns out, is very specific: if you have installed an SSL certificate for your machine that has expired, this error will occur. More specifically - if you have used SelfSSL and used your machine's name as the issuer, you're in for trouble. If you have SQL installed on the same box and the cert expires (which it does by default after 30 days) then you will see the above error.
The fix is pretty simple - remove the certificates from the machine store (using the MMC with the certificates snap-in for your computer) and then restart SQL.
What an amazingly stupid bug!
