Okay, don't know how many ways I can say it. It looks like you need to add the -S parameter to your BCP command line. Without it BCP is trying to connect to the default instance of SQL Server and you have specified that you are using a named instance on the new server. This means you need to tell bcp the name of the instance.

This:

SELECT @sMysql = 'bcp "SELECT sOutput FROM MYDATABASE.dbo.VPOSITIVEPAY" queryout ' + @sFilePath + @sFileName + ' -S [SQLSVR04\SS2005] -T -c'

Notice the -S parameter I have added.