Cant connect to sql server within visual web developer

Hi guys, I have both visual web developer 2008 sp1 and sql server 2008 sp1 installed in my machine and I cant connect to the database with VWD?

It is that from the Add Connection windows, I can select the server name, selecting windows authintication in this case. But I cant see any databases in the list under it? I tried to specifiy the name of the database I created but it give me the following
error when I test connecting to it.

"A network related or instance specific error occurred while establishing a connection to the SQL server. The server was noy found or accessible. Verify that the name of the instance name is correct and that SQL server is configured to allow remote connections.
(provider: Named pipes Provider, error: 40 – Could not open a connection to SQL server)".

 I am able to access the database using the SQL Managment Studio, so what is wrong with VWB?

Please help and thank you in advance.

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