You posted in a SQL 2008 forum, so to be sure, is it a SQL 2008 or 2008R2 instance we're talking about? If so, your error message says DBNETLIB which points to you may be using a SQL 2000 driver. Do you have the SQL Native Client installed? If so, you should choose that driver when setting up the DSN, i.e. "SQL Server Native Client 10.0", not "SQL Server". The driver version (scroll right in the dialog where you pick the driver) should start with "2009.".
There are no special teachers of virtue, because virtue is taught by the whole community. --Plato