This has nothing to do with the versions of SSMS and SQL Server, it's just a plain old connectivity problem. The machine you are connecting from cannot get in touch with the SQL Server instance at all. This can be due to a number of reasons:

1) You mispelled the server name.

2) You misspelled the instance name.

3) You are connecting from a different computer, but the instance is only set up to accept local connection.

4) The browser server is not running, and you try to use an instance name.

5) There is a firewall blocking the port, SQL Server is listening on.

6) There is a firewall blocking port UDP 1434 which the Browser service uses.

This is list is not likely to be exhaustive. This topic in Books Online is a good trouble-shooter: http://msdn.microsoft.com/en-us/library/ms345318%28v=sql.110%29.aspx