I find that particular error message very misleading. I've seen it several times where the problem had nothing to do with remote access.
It could be that the server name is incorrect in the web app's connection string
It could be that the server is offline (but if you're querying it, that's not the case)
It could be incorrect password.
That error is the 2005 version of the old message
"SQL Server does not exist or access is denied"
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