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 the default settings SQL Server does not allow remote connections. (provider: Named Pipes Provider, error: 40 - Could not open a connection to SQL Server)

You topic and your error look different. Please specify whats the issue.

Your error is to do with your application unable to connect to SQL server

Hi pkarthik,

From your description, I understand that after creating virtual directory for the existing web project, the web site failed to connect to the SQL Server 2005. However, debug the project in Visual Studio works well. If I have misunderstood your concern, please let me know.

Based on my experience, the most likely cause of this issue is the login account. When view the page through IIS, the build-in account: “ASPNET” account (for IIS 5) or “Network Service” account (for IIS 6) will fail to connect the SQL Server.

To fix this issue, you can choose one of the solutions:

    1. Change the Authentication Mode to SQL mode in connection string, for example:

Data Source=ServerAddress;Initial Catalog=database;Integrated Security=True
Data Source= ServerAddress;Initial Catalog=database;User ID=***;Password=*****

    2. Use ASP.NET impersonation.

ASP.NET Impersonation 
http://msdn2.microsoft.com/en-us/library/xh507fc5(vs.80).aspx

    3. Add build-in ASP.NET account in SQL Server logins.

In SQL Sever Management Studio, expand “Security” node, right click “Logins” node and select “New Login…”. Add “machineName\ASPNET” or “machineName\Network Service”

Hi Benson Yu,

Thankz a lot ur reply helped me and i chosed second option (impersonation) and it worked perfectly.

(FYI i'm not using local 2005 SQL Server, I'm connecting to 2003 SQL Server located in another machine)

Once again Thankz

Regards,

Karthik