Randy,

I tried connecting to a remote MS SQL 2008 server and local MS SQL 2005 server and I see the same errors in each case.
My database key in app.config of the business object project is as follows:

key="Whiteboard\Connection" value="Data Source=PSLTPCXROSIAK;Integrated Security=SSPI;Persist Security Info=False;Initial Catalog=Whiteboard"
key="Whiteboard\DataAccessClass" value="DataAccessSql"

where PSLTPCXROSIAK is my machine name and Whiteboard is the actual database name on MSSQL Server 2005
-Rich