As per Microsoft: "This message indicates that an error of some sort was returned from the operating system to a process within SQL Server. The process listed at the beginning of the message indicates which function within SQL Server received the error from the operating system. The exact operating system error number and text at the end of the message will vary depending on what problem the operating system encountered. This error is almost always seen in conjunction with other errors". See the link to "Microsoft event 17053 from source MSSQLSERVER" for more details on this issue.
In our case, this issue was caused by incorrectly filled-in password for service login. Correctly set-up account solved this problem.
You may see this in conjunction with event 17113. I resolved the problem by adding the user that SQL 2005 was running as (a Domain Admin account) to the local administrators group of the system. This occurred after I patched the SQL 2005 server.