CoCreateInstance returns CO_E_SERVER_EXEC_FAILURE (0x80080005) for ATL service created using Microsoft Visual Studio 2008

Create an ATL service project using Microsoft Visual Studio 2008. If you try to create instance of an object which is hosted by the service, CoCreateInstance returns error 0x80080005. The error means server execution failed.

It took lot of time to resolve this error and was quite frustrating as the error message is generic and does not give any clue about what could have gone wrong.
I tried creating a service which has one COM object and has a foo() method which does nothing and just returns. The CoCreateInstance was failing for this object as well with same error code.

While googgling for the error code, I came across an article which talks about a defect in Visual Studio 2008 wizard generated registry files. http://blogs.msdn.com/jigarme/archive/2008/05/08/cocreateinstance-returns-0x80080005-for-visual-studio-2008-based-atl-service.aspx

The APPID entry is missing from the wizard generated .rgs file. The error got fixed after adding the APPID entry in the .rgs file

ForceRemove {9ACB97C6-4492-40E8-A1BD-51DFE8962E92} = s 'CMyObject Class'
{
ProgID = s 'ATLComService.CMyObject.1'
VersionIndependentProgID = s 'ATLComService.CMyObject'
ForceRemove 'Programmable'
LocalServer32 = s '%MODULE%'
val AppID = s '%APPID%'
'TypeLib' = s '{E423A7DE-58C7-4535-A864-395DCEDE941F}'
}