>I ran into that error when I was running SQL Server Express because, by default, it has remote connections disabled. I had to enable TCP/IP connections. SQL Server 2005 Surface Area Configuration > Surface Area Configuration for Services and Connections. Then select the instance of SQL Server, Database Engin, Remote Connections. I changed mine to "Local and remote connections, using TCP/IP only". I guess if that doesn't work you could also enable "Using both TCP/IP and named pipes".
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>It could also be a bit simpler - your username/password doesn't have access to everything it needs on the server.

I found that we have both here - SQL Server and SQL Server Express. In some places where the connection string is defined it's saying the name of the Server (SQL Server), but in some other places it refers to it as local host. Could it be that it's trying to go to SQL Server Express instead? Do you think I should try to uninstall it or better fix all places to refer the server by its name?

Thanks again.