Sto se prvog problema tice, ocigledno nisi prosledio username/password. Ili postavi Windows Autentication, pa posalji mrezni un/pass (u connection string stavis Integrated Security=SSPI) ili napravi usera na sql-u i loguj se kao on.
Za drugo ne znam sta da ti kazem - napravi konekciju, otvori je i zatvori pa vidi da li ce ti puci exception, ako pukne, postuj gresku ovde pa cemo pokusati da resimo, ako ne - onda si vec resio

Sweet child in time you'll see the line
The line that's drawn between the good and the bad
See the blind man shooting at the world
Bullets flying taking toll
If you've been bad, Lord I bet you have
And you've not been hit by flying lead
You'd better close your eyes, bow your head
And wait for the ricochet