FIXED!!!

Perseverance and we get there!.

The fix was as follows in my case:

Could connect using the [servername]\instancename but not using its alias.

SQL 2008 R2 Standard Edition x64 version

1) Open SQL Configuration Manager

2) Add a new alias entry in both the SQL Native 10.0 Configuration(32 Bit) and SQL Native Client 10.0 Configuration with the following:

a) Alias Name = your servers DNS Alias entry

b) Protocol: select 'Named pipes' from the drop down

c) Server: Should be the named of the server e.g. [servername]\instancename

as they say, 'it's easy when you know how'

And then retry connecting to the server using the Alias and BINGO. This should work for you also.