I have an almost identical setup, ASP.NET to MSDE2K. I was successful using this article:
http://support.microsoft.com/?kbid=872905FWIW my app stores an attachment string (using Integrated Security) as follows:
Application["strDSN"] = "server=ABEAST\\MSDE2K_1;Integrated Security=SSPI;database=CEQM";
Regards. Al
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