Here are a few things I'd consider:

* Can you ping the target server from the computer the package is running on? If not, the server may be down or there may be routing or DNS issues

* Is SQL Server Browser running on the target computer, or did you supply the port number in the connection string?

* Can you get a telnet session to the server using the port number? If not, SQL Server may not be running

* Have you spelled the server and instance name correctly?

* Does the target server have TCP enabled in SQL Server Configuration Manager?

* Can you connect to the server from anywhere else?

John