I have reinstalled SQL twice now thinking the first install was corrupt.
1. First install was Windows Mode, no luck.
2. Second install was Mixed Mode, no luck.
3. I tried both the traditional and integrated connection string without any local results.
I believe its an incompatibility between Windows 2003 Server and Windows SQL 2000 that hinders Windows apps from local logon and accessing SQL.
It's a strange thing that I can run my windows app remotely (via VS-2003) from a Windows 2000 Pro Workstation and connect to the same troubled 2003 Server, using the same connection string) without any problem. It works like a dream.
Also, my workstation Enterprise Manager, Query Analyzer, and Profiler all login and run flawlessly to the same troubled 2003 server. I just don't get it.