Make sure that the server= and the database= are both correct for this installation.
A server address of . means local. If you are running a two-tier configuration you will need to add the database server name Master\Master (normally found in the object explorer of SQL Server Management Studio)
In some instances the server name will be something like .\SQLEXPRESS and removing that trailing information can help resolve issues as well (This was seen when upgrading from Version 8 Patch 4 to Version 8 Patch 6)