This is one of the most common error messages when users use default settings to connect to a SQL Server Express Instance.
ERROR
Sqlcmd: Error: Microsoft SQL Native Client: An error has occurred while establishing a connection to the server. When connecting to SQL Server 2005, this failure may be caused by the fact that under the default settings SQL Server does not allow remote connections.
Please refer the following article to make sure that your SQL Express Instance is configured to accept Remote Connections:
http://support.microsoft.com/kb/914277
Also, make sure from the SQL Server Configuration Manager that TCP/IP and Named Pipes are enabled and you have VIA protocol disabled.
Another thing you might want to check is if SQL Server Browser Service is up and running.
