I just stumbled upon this issue and while the solution seems very simple, I almost pulled my hair before I could fix it.
The symptoms: I had Firebird (installed with Morfik) working perfectly, then installed a Borland/CodeGear app that set up Interbase (client), and after that Firebird stopped working (“XNET error (xnet:2323) XNET server initialization failed”). Any amount of un-installations and re-installations did not help. Googling around did not reveal any pointers either.
The resolution: I had to manually replace GDS32.DLL in Windows\System32 with a version form Firebird.
The reason: both DB servers use the same file (GDS32.DLL) for client connections, but of course, different versions. Although the Interbase version was much older (6.5?, dated 2004 something) than the Firebird version (2.0, dated end of 2006) the version number inside the version resource is higher (6.5.something v.s. 6.3.something), so Windows was keeping the Interbase version, and did not allow Firebird to replace it (typical DLL hell:-) — and of course Firebird could not cooperate with this DLL.
Suggestion: I would recommend to the parties (most probably this should fall on Firebird) to use different filenames (e.g. add “fb” to all file names) OR improve the error message printed OR have a FAQ item somewhere on the Net explaining what to do (like this one :-). Of course, interoperabilitiy issues may arise (running Interbase and Firebird on the same system, using the same ports, etc.)…