SQL Server is not configured to use TCP/IP, or the standard port (1433) is not being used.
The connection to the server is being blocked by a firewall, or there is some other network connectivity issue.
To check that you can connect to the SQL Server port from the PaperCut server, open a command prompt (cmd.exe) and try the following command:
telnet sqlservername 1433
If this fails, then it’s likely that you are encountering one of the above problems.
To check if TCP/IP is enabled in SQL Server, you can do use the SQL Surface Area tool. Start → Programs → Microsoft SQL Server 2005 → Configuration Tools → SQL Server Surface Area Configuration → Configuration for Services and Connections → Remote Connections.