Setting up RPi3 access point, hostapd error: Failed to set channel

Question

I'm running Raspbian 9 (strech) on a Pi-3 modem B ver 2.

Following guides found online, I have had it working with hostapd as an access point once. But after reboot that stopped working. In the process of trying to getting that to work again, I removed the "wpasupplicant" package. Now I can't seem to get hostapd to work at all. Running it on the command line, these are the messages and errors that seem relevant:

1526085017.011832: Completing interface initialization
1526085017.011851: Mode: IEEE 802.11g  Channel: 6  Frequency: 2437 MHz
1526085017.011876: DFS 0 channels required radar detection
1526085017.011899: nl80211: Set freq 2437 (ht_enabled=1, vht_enabled=0, bandwidth=20 MHz, cf1=2437 MHz, cf2=0 MHz)
1526085017.011936:   * freq=2437
1526085017.011956:   * vht_enabled=0
1526085017.011974:   * ht_enabled=1
1526085017.011991:   * sec_channel_offset=0
1526085017.012009:   * channel_type=1
1526085017.012095: nl80211: Failed to set channel (freq=2437): -16 (Device or resource busy)
1526085017.012123: Could not set channel for kernel driver
1526085017.012143: Interface initialization failed
1526085017.012163: wlan0: interface state UNINITIALIZED->DISABLED
1526085017.012191: wlan0: AP-DISABLED

I suspect that I messed up a configuration somewhere, so now I am missing a kernel driver module or something. Here is an output of lsmod:

Module                  Size  Used by
cmac                   16384  1
bnep                   20480  2
hci_uart               36864  1
btbcm                  16384  1 hci_uart
serdev                 20480  1 hci_uart
bluetooth             368640  24 hci_uart,bnep,btbcm
ecdh_generic           28672  1 bluetooth
brcmfmac              307200  0
brcmutil               16384  1 brcmfmac
cfg80211              573440  1 brcmfmac
rfkill                 28672  4 bluetooth,cfg80211
snd_bcm2835            32768  0
snd_pcm                98304  1 snd_bcm2835
snd_timer              32768  1 snd_pcm
snd                    69632  3 snd_timer,snd_bcm2835,snd_pcm
uio_pdrv_genirq        16384  0
fixed                  16384  0
uio                    20480  1 uio_pdrv_genirq
ip_tables              24576  0
x_tables               32768  1 ip_tables
ipv6                  434176  46

Would appreciate much if someone has hostapd working please post the output of "lsmod", or any other insights.

Thanks a million!

Here are my configs:

/etc/default/hostapd

DAEMON_CONF="/etc/hostapd/hostapd.conf"
DAEMON_OPTS="-dd -t"

/etc/network/interfaces.d/wlan0

allow-hotplug wlan0
iface wlan0 inet static
    address 192.168.89.1
    netmask 255.255.255.0
    network 192.168.89.0
    broadcast 192.168.89.255

/etc/hostapd/hostapd.conf

interface=wlan0
driver=nl80211
ssid=Pi3AP
hw_mode=g
channel=6
ieee80211n=1
wmm_enabled=1
ht_capab=[HT40][SHORT-GI-20][DSSS_CCK-40]
macaddr_acl=0
auth_algs=1
wpa=2
wpa_key_mgmt=WPA-PSK
wpa_passphrase=Pi3APPassphrase
rsn_pairwise=CCMP
wpa_pairwise=CCMP
ctrl_interface=/var/run/hostapd
ctrl_interface_group=0
logger_stdout=-1
logger_stdout_level=2
logger_syslog=-1
logger_syslog_level=0
max_num_sta=5
preamble=1