The TCP/IP protocol must be turned on in the instance that you are trying to connect to.
In the SQL Server Configuration Manager, in the list of network protocols for the instance, the status for TCP/IP must be set to Enabled.
Restart the SQL Server instance if it's already running, along with the SQL Server Browser service (if you use this at your site).
Some versions of SQL Server don't allow remote connections, by default, which means that the default setting for TCP/IP is Disabled.