If you are using SQL Server 2000 and you have a job with a step that fails with the following error message:
Unable to connect to SQL Server '(local)'. The step failed.
it may mean that this step is configured to use a database that existed when the step was created but has later been dropped.
Moreover, if you don't remember what database this step should use, checking the step definition in Enterprise Manager won't reveal the cause of the problem, because there will be some database selected in the Database combo box (it cannot be empty) but it won't be the same database that the step is really configured to use (this database does not exist so it is not in the combo box).
To fix the problem select a new database for each failing step and save the changes.