Yes, this true because it happened with me, after installing WSS 3.0 SP1 I started installing Ms Project Server 2007 SP1, exactly in step 5 it stopped and threw an exception tilling that the Microsoft Office Project Server Events Service was not able to get started !!??
After searching completely the "Whole Internet" I found one post talking about this issue
please check this url
and what I came to know that this service trying to access the Internet address
but the network setup did not allow this (this is true and expected for the ideal and secure network). I was sure that this is my issue that stopped me from completing my work in the last 2 days.
So, the only solution suggested by my colleagues in Networks and Systems department is to allow Internet Access in complete during the installation of SP1 then remove it
It work, yes, but for me I consider this a stupid bug regardless of the person who wrote the code unless it is a policy to catch the people who are using the unlicensed copies. Again I considered it as a bug because it did not report this to the event log.