BUG #6118: Server doesn't listen

The following bug has been logged online:

Bug reference: 6118
Logged by: Shahnawaz Shaikh
Email address: Shahnawaz(dot)shaikh(at)accenture(dot)com
PostgreSQL version: 8.4
Operating system: Windows server 2003
Description: Server doesn't listen
Details:

When i try to start the PostgreSQL 8.4 server, below issue is encountered,

System error 1069 has occurred.
The service did not start due to a logon failure.
The start command returned an error <2>
Press <return> to continue....

While, when i try to connect the PostgreSQL 8.4 from pgAdmin III i get the
below error on entering password

Server doesn't listen
The server doesn't accept connections: the connection library reports
could not connect to server: Connection refused (0x0000274D/10061) Is the
server running on host "127.0.0.1" and accepting TCP/IP connections on port
5432?
If you encounter this message, please check if the server you're trying to
contact is actually running PostgreSQL on the given port. Test if you have
network connectivity from your client to the server host using ping or
equivalent tools. Is your network / VPN / SSH tunnel / firewall configured
correctly?
For security reasons, PostgreSQL does not listen on all available IP
addresses on the server machine initially. In order to access the server
over the network, you need to enable listening on the address first.
For PostgreSQL servers starting with version 8.0, this is controlled using
the "listen_addresses" parameter in the postgresql.conf file. Here, you can
enter a list of IP addresses the server should listen on, or simply use '*'
to listen on all available IP addresses. For earlier servers (Version 7.3 or
7.4), you'll need to set the "tcpip_socket" parameter to 'true'.
You can use the postgresql.conf editor that is built into pgAdmin III to
edit the postgresql.conf configuration file. After changing this file, you
need to restart the server process to make the setting effective.
If you double-checked your configuration but still get this error message,
it's still unlikely that you encounter a fatal PostgreSQL misbehaviour. You
probably have some low level network connectivity problems (e.g. firewall
configuration). Please check this thoroughly before reporting a bug to the
PostgreSQL community.

My Postgresql.conf has the below settings:
# - Connection Settings -

listen_addresses = '*' # what IP address(es) to listen on;
# comma-separated list of addresses;
# defaults to 'localhost', '*' = all
# (change requires restart)
port = 5432 # (change requires restart)
max_connections = 100 # (change requires restart)

My pg_hba.conf has below configuration:
# TYPE DATABASE USER CIDR-ADDRESS METHOD

# IPv4 local connections:
host all all 127.0.0.1/32 md5
# IPv6 local connections:
#host all all ::1/128 md5

Kindly do the needful.