We searched the internet and were unable to find a resolution to this issue. After some testing it was discovered that when the client tools are running the RTM version, 1399, and the instances are running SP2 or beyond this behavior occurs.
See screenshots below for how to find the versions you are running.
The simple fix to this was to install the latest service pack of SQL2005 for the client tools on the workstation. There is no error given and none logged that we could find.
Lesson Learned: Always keep your clients tools on the the same or later version of SQL that your instances are running on.
Register the server and to the right of the name you will see the version - 9.0.3042 in this example
In Management Studio, Click Help/About, the version is on the first line as shown circled in red.
9.00.1399 is the RTM release any other version may cause the issue noted above.