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>Do you know if you can specify encrypt = 'yes' in connection string with integrated security? I got some strange error when I tried to add it into my connection string.

I haven't needed that for anything I've worked on, but I know you need to have some kind of certificate on the server to be able to enable encryption (similar to what you need for an SSL connection). Maybe that's why it was failing for you?

The SQL Books Online are actually pretty decent - here's a link which might help:

http://msdn2.microsoft.com/en-us/library/ms131691.aspx