Just an update, we are still working on this. This seems to be a very complicated problem and we are trying to fix it without having to bring down any servers.
Update: We handed this issue over to PSOFT yesterday and they are working to correct the problem. There seems to be a bug that constantly causes a creation failure. We appologize to all our customers that have been facing this problem for the last couple of days. We are hoping it is resolved within the next 24 to 48 hours.
What we have done right now is turned off new creations on MSSQL4 and turned on creations for MSSQL3. Any customers that really need to create a database right away can signup for a new trial account and shift their files there. Once shifted, they could open a ticket with us and we'd close down their old account and credit any payments made to this new account.