Symptoms
Consider the following two scenarios:
Scenario 1:You install SQL Server 2005 failover cluster on a Windows Server 2008 or Windows Server 2008 R2 failover cluster using the default configuration.On the same system you install a new instance of SQL Server 2008 failover cluster.
Scenario 2: You install two or more instances of SQL Server 2005 failover cluster on a Windows Server 2008 or Windows Server 2008 R2 failover cluster using the default configuration.You upgrade one of them to SQL Server 2008.
In either of these scenarios, you will notice that the SQL Server resource of  all the SQL Server 2005 instances that are currently active on the node where the SQL Server 2008 setup actions are performed, enters a failed state in the Failover Cluster Manager. 
Note: In the above statements, the phrase ‘default configuration’ implies that you install the SQL Server 2005 failover cluster using the default options during the setup process and did not make any changes to the failover action of the SQL Server resource after the setup has been complete. Also any stand alone (non-clustered) instances running on the node are not affected by this problem.
Resolution
The default configuration of SQL Server 2005 failover cluster does not set the following policy on SQL Server resources:
“If resource fails, attempt restart on current node.”
All the instances of SQL server running on a node will always share the highest version of SQL cluster resource dll present on that node. When installing or upgrading to SQL Server 2008 for the first time, the setup process replaces the existing version of SQL cluster resource dll with a newer and a higher version. As part of this procedure, it shuts down SQL Server resources to avoid a system reboot at the end of setup. Hence, if the policy above is not set, the cluster will not attempt to restart the failed SQL Server resources.