Thanks for this input. It gave me following errors.
"Device activation error. The physical file name'C:\...mdf'
may be incorrect. Use MOVE WITH to identify a valid location for the file."
I then created same path that was required and it worked.
I think restore was looking for same file path that was used while exporting the database.
I had tried using these commands in the Query Analyzer also:
restore database newdbname from disk = 'd:\mssql7\backup\A1203.bak'
with file=1, replace,
move 'A1203.mdf' to 'd:\mssql7\data\A1203.mdf',
move 'A1203_log.ldf' to 'd:\mssql7\data\A1203.ldf'
This command returned following errors
Server: Msg 3234, Level 16, State 2, Line 1
Logical file 'A1203.mdf' is not part of database 'newdbname'. Use RESTORE FILELISTONLY to list the logical file names.
I just wanted to share with you this info and would love to know if I could have modified this command to take care of those errors so that I would not have to create same path on the server.