Crawling Issue with .NET 3.5 SP1

A new issue has been discovered that interferes with crawling content in specific situations. If you're indexer is set to crawl itself, via the Central Admin setting, or manual hosts modification, you might be running into this issue. You will see a combination of errors in your event logs, ULS logs and crawl logs that match the following. In order to fix this, please follow the steps in the following KB article.

http://support.microsoft.com/kb/896861

Crawl Log:
Event Type: Warning
Event Source: Office Server Search
Event Category: Gatherer
Event ID: 2436
Date:  10/22/2008
Time:  10:02:55 AM
User:  N/A
Computer: MOSS2007
Description:
The start address <http://portal> cannot be crawled.

Context: Application 'SharedServices1', Catalog 'Portal_Content'

Details:
Access is denied. Check that the Default Content Access Account has access to this content, or add a crawl rule to crawl this content.   (0x80041205)

For more information, see Help and Support Center at http://go.microsoft.com/fwlink/events.asp.

ULS Logs: (verbose)
10/22/2008 10:59:04.23  mssdmn.exe (0x1420)                      0x151C Search Server Common           MS Search Indexing             7hoo Verbose  GetVirtualServerPolicy is about to call WS for virtual server, strVirtualServerUrl http://portal
10/22/2008 10:59:04.23  mssdmn.exe (0x1420)                      0x151C Search Server Common           PHSts                          0 Monitorable ***** Couldn't retrieve server http://portal policy, hr = 80041205 - File:d:\office\source\search\search\gather\protocols\sts3\sts3util.cxx Line:548 
10/22/2008 10:59:04.23  mssdmn.exe (0x1420)                      0x151C Search Server Common           PHSts                          0 Monitorable ****** Server portal security initialization failed, hr = 80041205 - File:d:\office\source\search\search\gather\protocols\sts3\sts3util.cxx Line:317 
10/22/2008 10:59:04.23  mssdmn.exe (0x1420)                      0x151C Search Server Common           PHSts                          0 Monitorable CSTS3Accessor::InitURLType: Return error to caller, hr=80041205 - File:d:\office\source\search\search\gather\protocols\sts3\sts3acc.cxx Line:1542 
10/22/2008 10:59:04.23  mssdmn.exe (0x1420)                      0x151C Search Server Common           PHSts                          0 Monitorable CSTS3Accessor::InitURLType fails, Url http://portal, hr=80041205 - File:d:\office\source\search\search\gather\protocols\sts3\sts3acc.cxx Line:184 
10/22/2008 10:59:04.23  mssdmn.exe (0x1420)                      0x151C Search Server Common           PHSts                          0 Monitorable CSTS3Accessor::Init fails, Url http://portal, hr=80041205 - File:d:\office\source\search\search\gather\protocols\sts3\sts3handler.cxx Line:243 
10/22/2008 10:59:04.23  mssdmn.exe (0x1420)                      0x151C Search Server Common           PHSts                          0 Monitorable CSTS3Handler::CreateAccessorExB: Return error to caller, hr=80041205 - File:d:\office\source\search\search\gather\protocols\sts3\sts3handler.cxx Line:261 

Security Logs:
Logon Failure:
Reason: An error occurred during logon
User Name: mosscrawl
Domain: SPI
Logon Type: 3
Logon Process: Èù8
Authentication Package: NTLM
Workstation Name: MOSS2007
Status code: 0xC000006D
Substatus code: 0x0
Caller User Name: -
Caller Domain: -
Caller Logon ID: -
Caller Process ID: -
Transited Services: -
Source Network Address: XX.XX.XX.XX
Source Port: 1417