Could be a couple of things, but the first thing that jumps to mind is that you may be using the name of the Clustered server for your instance name...
For example, your cluster name is CLUSTERSERVER and you are trying to name your your SQL Server resource the same name as CLUSTERSERVER. The Cluster resource and the Virtual Server (SQL) will have different names and IP addresses.
If this doesn't help, let me know. We can shoot down the DNS and WNS paths later.
Jeff
"Keep Your Stick On the Ice" ..Red Green