An error has occurred while establishing a connection to the server when connecting to SQL server 2005, this failure may be caused by the fact that under default settings SQL server does not allow remote connection. ( provider: Named Pipes Provider, error: 40 – could not open a connection to SQL server. )
Step 1) Make sure SQL SERVER is up and the instance you try to connect is running.
Step 2) Your system Firewall should not block SQL Server port.
Step 3) Go to Computer Management >> Service and Application >> SQL Server 2005 Configuration >> Network Configuration
Enable TCP/IP protocol. Make sure that SQL SERVER port is by Default 1433.
Step 4) Now follow this KB Article of MSDN depending on your server : http://support.microsoft.com/default.aspx?scid=kb;EN-US;914277
UPDATE : If above solution does not help refer the follow up post SQL SERVER – Fix : Error : 1326 Cannot connect to Database Server Error: 40 – Could not open a connection to SQL Server where additional issues with FIREWALL is explained with images.
Reference : Pinal Dave (http://blog.SQLAuthority.com)