A network-related or instance-specific error occurred while establishing a connection to SQL Server. The server was not found or was not accessible. Verify that the instance name is correct and that SQL Server is configured to allow remote connections. (provider: SQL Network Interfaces, error: 26 - Error Locating Server/Instance Specified)
http://stackoverflow.com/questions/1391503/a-network-related-or-instance-specific-error-occurred-while-establishing-a-conne
可能是端口问题，需要打开TCP 1433 / UDP 1434端口
http://www.cnblogs.com/humin/archive/2011/10/27/2227136.html
I've resolved the issue. It was due to the SQL browser service.
Solution to such problem is one among below -
Check the spelling of the SQL Server instance name that is specified in the connection string.
Use the SQL Server Surface Area Configuration tool to enable SQL Server to accept remote connections over the TCP or named pipes protocols. For more information about the SQL Server Surface Area Configuration Tool, see Surface Area Configuration for Services and Connections.
Make sure that you have configured the firewall on the server instance of SQL Server to open ports for SQL Server and the SQL Server Browser port (UDP 1434).
Make sure that the SQL Server Browser service is started on the server.