What error are you seeing from the Data Source?
is the TCP\IP Port of the SQL Database set to Dynamic or set to 1433?
You can check this by going into "SQL Server Configuration manager" -> "SQL Server Network Configurations" -> "Protocols for XXXXXXX". Here check to see if "TCP/IP" and "Named Pipes" is enabled.
Also, right click on "TCP/IP" and select "Properties" on the "IP Addresses" tab make sure all "TCP Dynamic Ports" are set to 0, and the "IPAll" section has "TCP Port" set to 1433
Stephen