SMS LOG ON FAILURE

Trying to run SMS 1.2 on my pc. loads fine but when trying to pull up SMS Administrator, unable to log in. get message ” unable to connect to serverxxx. specified server cannot be located or specified db or user info incorrect”. Had another user tryto log on from my box & she gets the same message but can pull it up fine from her box. can see the server fine in network neighborhood. MS Knowledgebase says its a sql client config problem????? where would that be on the server side?
Any other thoughts?
Thanks