List of checks you may need to perform before you install SQL Server Cluster.

1. Verify your system meets the minimum requirements
910228 SQL Server 2005 Readme and installation requirements
http://support.microsoft.com/default.aspx?scid=kb;EN-US;910228
907284 Changes to the readme file for SQL Server 2005
http://support.microsoft.com/default.aspx?scid=kb;EN-US;907284
327518 The Microsoft support policy for a SQL Server Failover cluster – Please note that ONLY Microsoft Failover Clusters are supported.
http://support.microsoft.com/default.aspx?scid=kb;EN-US;327518
SQL Server 2008  Before Installing Failover Clustering
http://download.microsoft.com/download/4/5/3/453739ed-cb74-46b1-b7af-f157ee71db20/SQL2008Readme.htm.
http://msdn.microsoft.com/en-us/library/ms189910%28v=SQL.100%29.aspx

2. Log on as an Administrator.
SQL Server 2005/2008:  Log on to the cluster node as a domain administrator that is also local administrator on all nodes, but not necessarily an account that is to be used as a service startup account for the SQL Server services.

Pre create user groups in active directory for different SQL Server 2005/2008 services(SQL,Agent,FT).SQL Server setup will add the service accounts of SQL Services to this groups during setup. You have to pre create unique group name for each Service in AD and enter it when prompted during SQL Server2005/2008 Cluster setup.
SQL Server Setup grants the following Windows NT rights and privileges to the Group you enter during setup (If you can not run the setup as domain administrator then add the service logon accounts to the security groups created in AD before the setup).
For SQL Server group
Log on as a service (SeServiceLogonRight)
Act as part of the operating system (SeTcbPrivilege) (only on Windows 2000)
Log on as a batch job (SeBatchLogonRight)
Replace a process-level token (SeAssignPrimaryTokenPrivilege)
Bypass traverse checking (SeChangeNotifyPrivilege)
Adjust memory quotas for a process (SeIncreaseQuotaPrivilege)
Permission to start SQL Server Active Directory Helper
Permission to start SQL Writer
and many more
For  SQL Server Agent group
Log on as a service (SeServiceLogonRight)
Act as part of the operating system (SeTcbPrivilege) (only on Windows 2000)
Log on as a batch job (SeBatchLogonRight)
Replace a process-level token (SeAssignPrimaryTokenPrivilege)
Bypass traverse checking (SeChangeNotifyPrivilege)
Adjust memory quotas for a process (SeIncreaseQuotaPrivilege)

3. There should not be a pending Reboot requirement

Check pending Reboot requirement in following registry:
HKLM\SYSTEM\CurrentControlSet\Control\Session Manager
In the right-hand pane, is there a value of PendingFileRenameOperations?  If so, is it empty?
If empty close the registry editor.  If not empty, reboot the machine prior to running setup.  After logging in, re-check this registry value to make sure it is empty.

4. Verify Cluster “Heartbeat”
For a Failover Clustered Instance installation on Windows 2003 or earlier, verify cluster networking was setup per:
258750 Recommended private “Heartbeat” configuration on a cluster server
http://support.microsoft.com/?id=258750
NOTE: This needs to be followed explicitly in regards to the binding orders and your heartbeat adapter’s configuration.

5. Verify the TCP\IP Advanced DNS settings are identical on the “Public” network adapters between all Failover cluster nodes

6. Stop All Non- Microsoft Services  Excluding services required by SAN or network adapters online

7. Make sure  below services are running on all node’s
Cryptographic Services <====This must be running on all nodes.
DNS Client
Event Log
Remote Registry Service <====This must be running on all nodes.
Task Scheduler
Windows Management Instrumentation Driver Extensions
Windows Management Instrumentation

8.  Flush Cached DNS Entries
Flush the DSN cache.

Ipconfig /flushdns
then… Referesh te netbios name registered
Nbtstat –RR

9. Verify Logon Server
Open a command prompt on each node and enter the command:

set logonserver

Verify if logon server is same on all nodes.

10. Verify Admin Shares
IPC$
C$
Admin$
DriveLetter$
DriveLetter = Disk in which you have setup files.

Use the “Shared Folders” MMC snap-in  to verify the existing Administrative shares.

11. Only One RDP Session

Make sure no one else is logged in to any of the nodes. There should be only one logon session in active node which we use for setup.
12 . Make sure we are able to failover SQL Server groups to all nodes.

13. Cluster MSDTC
Create MSDTC resource.

14. If windows2008+ Grant  “Create Computer Objects” permission for  the computer object created for the cluster  (Computer Name object(CNO)).

http://mssqlwiki.com/2009/03/26/installation-of-sqlserver20052008-fails-on-windows2008-cluster/

15. For Windows 2008, see How to configure DTC for SQL Server in a Windows 2008 cluster http://blogs.msdn.com/cindygross/archive/2009/02/22/how-to-configure-dtc-for-sql-server-in-a-windows-2008-cluster.aspx
Use the following KB article to Cluster MSDTC if not already clustered on Windows 2003:
301600 How to configure Microsoft Distributed Transaction Coordinator on a Windows Server 2003 cluster
http://support.microsoft.com/default.aspx?scid=kb;EN-US;301600

16. Grant Read SPN and write SPN permission for startup account of SQL Server (or) Security group provided during installation for SQL Service startup account.

17) Verify Dependencies http://support.microsoft.com/default.aspx?scid=kb;EN-US;835185