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Developing in VS2008 on win2008 machine. Connecting to SQL Server 2000 Db on win2003 server

protected void Page_Load(object sender, EventArgs e)
    {
        string connectionString = "Server=myserver;Initial Catalog=mydatabase;User Id=myuser;Password=mypassword;";
        SqlConnection conn = new SqlConnection(connectionString);
        this.txtLogOutput.Text += "opening";
        conn.Open();
        this.txtLogOutput.Text += "closing";
        conn.Close();
    }

When I try to run this as an asp.net web application from VS2008 set to use IIS as the server I get the following error:

The timeout period elapsed prior to completion of the operation or the server is not responding

When I use the built in dev server (cassini) it works fine!
Sql Management Studio connects without issue and I can telnet the server on the sql server port fine.

This has seemingly only just started happening with no known changes. Any suggestions as to where to look or what to do woudl be much appreciated.