Regional and Language Options

In Regional and Language Options box, under Supplemental language support section, check both check boxes
Install files for complex script and right-to-left languages
and
Install for East Asian languages
Click OK to install
Download language packs for Microsoft Office SharePoint Server (MOSS) 2007:

Select the language from Change Language dropdownlist

Available language packs:

Arabic
Bulgarian
Catalan
Chinese (Simplified)
Chinese (Traditional)
Croatian
Czech
Danish
Dutch
English
Estonian
Finnish
French
German
Greek
Hebrew
Hindi
Hungarian
Italian
Japanese
Korean
Latvian
Lithuanian
Norwegian (Bokmal)
Polish
Portuguese (Brazil)
Portuguese (Portugal)
Romanian
Russian
Serbian (Latin)
Slovak
Slovenian
Spanish
Swedish
Thai
Turkish
Ukrainian

After downloading the Server Language Pack.img

Extract the ServerLanguagePack.img file (I prefer to extract using ISO Edit)

Extract the ServerLanguagePack.img

Run Setup

After installing the language pack

Rerun the Sharepoint Products and Technologies Configuration Wizard using default settings.(If you don’t run the language pack will not be installed properly)

To run the Sharepoint Products and Technologies Configuration Wizard:

Click Start > Programs > Administration Tools click sharepoint Products and Technologies Configuration Wizard

then click Next

Click Yes in the dialog box.

On the modify server farm settings, click Do not disconnect from this server farm, then Next

After configuration successful click Finish

After success installation, you will be find the language pack which you installed before in the dropdownlist while creating the site collection

Creating site collection

Result:

Sharepoint collaboration portal in German language