We are facing the SQL Timed out issue and I found that the Error event ID is either Event 5586 or 3355 (Unable to connect / Network Issue), also could see few other DB related error event ids (3351 & 3760 - Permission issues) reported at different times.
what could be the reason? any help would be appreciated..
Can you elaborate a little? When is this happening? Can you reproduce the behavior or is it sporadic?
It appears SharePoint is involved. Is it possible there is high demand for a large file?
You should check for blocking/locking that might be preventing your query from completing. Also, if you have lots of computed/calculated columns (or just LOTS of data), your query make take a long time to compute.
Finally, if you can't find something blocking your result or optimize your query, it's possible to increase the timeout duration (set it to "0" for no timeout). Do this in Enterprise Manager under the server or database settings.
Are some of your webapps running under either the Local Service or Network Service account? If so, if your databases are not on the same machine (i.e. SharePoint is on machine A and SQL on machine B), authentication will fail for some tasks (i.e. timerjob related actions etc.) but not all. For instance it seems content databases are still accessible (weird, i know, but i've seen it happen....).