How does WSUS connect to WMSDE?

I do not know anything about SQL except it is a database and it is treated differently.
I have installed WSUS on a win2k3 server enterprise edition named “newb1”, but now I noticed that the SQL desktop engine is not running even though it says so in services. On the lower right bottom of my screen is the icon for a SQL server, but there is no green arrow nor is it red, its a white circle next to an icon of a server. When I right click on this icon and select “Open SQL Server Service Manager” and click on the drop-down arrow, there is no server named “newb1”. What do I need to do to select the server name and start SQL desktop engine for WSUS? Thank you!