You cannot connect to a local instance of SQL Server on a Windows XP-based computer or on a Windows 2000-based computer when you use "localhost" in the pipe name

On a Microsoft Windows XP-based computer or on a Microsoft Windows 2000-based computer, you use the Named Pipes protocol to connect to a local instance of Microsoft SQL Server 2005 or Microsoft SQL Server 2000. When you use "localhost" in the pipe name, you cannot connect to the instance of SQL Server. Depending on the tool that you use to connect to the instance of SQL Server, you experience one of the following issues:

• If you use the Osql.exe command-line utility to connect to the local instance of SQL Server 2000, you receive the following error message:
  
  [DBNETLIB]SQL Server does not exist or access denied. [DBNETLIB]ConnectionOpen (Connect()).
• If you use the Sqlcmd.exe command-line utility to connect to the local instance of SQL Server 2005, you receive the following error message:
  HResult 0x34, Level 16, State 1 Named Pipes Provider: Could not open a connection to SQL Server [52]. Sqlcmd: Error: Microsoft SQL Native Client : 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.
  
  
  
  Sqlcmd: Error: Microsoft SQL Native Client : Login timeout expired.

Note This issue does not occur on computers that are running Microsoft Windows Server 2003 or later versions of Windows.