• in the install package, web.config shall be same as release.config
• SQL server authentication method is dependng on your network security concept and has no impact on DNN performance or front end security
• Here is an article about hardening DNN security that includes a recommendation to use a different account and how to st it up.
• Server registration has no issue on the DNN access as long as web server and db server are installed on same machine

After reading through some of the posts it looks like even though I had my data connection strings right, they were commented out.  I guess DNN expects SQL 2005 Express as its default DB.  Here is a snippet from my web.config - Ive bolded where I had to move the commenting to allow it to read my SQL 2000 DB.

<connectionStrings>
    <!-- Connection String for SQL Server 2005 Express
    <add
      name="SiteSqlServer"
      connectionString="Data Source=.\SQLExpress;Integrated Security=True;User Instance=True;AttachDBFilename=|DataDirectory|Database.mdf;"
      providerName="System.Data.SqlClient" />  -->
    <!-- Connection String for SQL Server 2000/2005 -->
    <add name="SiteSqlServer" connectionString="Server=(local);Database=DotNetNuke;uid=dnnuser;pwd=dnnuser;" providerName="System.Data.SqlClient" />
  </connectionStrings>
  <appSettings>
    <!-- Connection String for SQL Server 2005 Express - kept for backwards compatability - legacy modules
    <add key="SiteSqlServer" value="Data Source=.\SQLExpress;Integrated Security=True;User Instance=True;AttachDBFilename=|DataDirectory|Database.mdf;"/> -->
    <!-- Connection String for SQL Server 2000/2005 - kept for backwards compatability - legacy modules  -->
    <add key="SiteSqlServer" value="Server=(local);Database=DotNetNuke;uid=dnnuser;pwd=dnnuser;" />
    <add key="InstallTemplate" value="DotNetNuke.install.config" />
    <add key="AutoUpgrade" value="true" />
    <add key="InstallMemberRole" value="true" />
    <add key="ShowMissingKeys" value="false" />
    <add key="EnableWebFarmSupport" value="false" />
    <add key="EnableCachePersistence" value="false" />
    <add key="HostHeader" value="" />
    <!-- Host Header to remove from URL so "www.mydomain.com/johndoe/Default.aspx" is treated as "www.mydomain.com/Default.aspx" -->
    <add key="RemoveAngleBrackets" value="false" />
    <!--optionally strip angle brackets on public login and registration screens-->
    <add key="PersistentCookieTimeout" value="0" />
    <!--use as persistent cookie expiration. Value is in minutes, and only active if a non-zero figure-->
    <add key="InstallationDate" value="4/6/2007" />
  </appSettings>