Hi Sudheer,
Some check list
1. Check that your SQL server is exposed to tcp/ip protocol using SQL Server Configuration Manager.
2. Check the format of your connection string
<add connectionstring="Server=<Server Name>;User ID=<User Name>;Password=<Password>;Database=<DatabaseName>" name="<ConnectionStringName>" />
3. Check that your SQL Server is using mixed mode for the authentication.
Thanks
Vinod