Troubleshooting steps are as below:
First, telnet
If connection could not be established then
Issue seems to be that you have not enabled the remote connections on the SQL 2005, to do this
1. Go to Surface area COnfiguration from Start - Programs - Microsoft SQL 2005 - Configuration Tools - SQL Server Surface Area Configuration
2. Select Surface area configuration for services and connections
3. Select Remote Connections from Database Engine dropdown list and enable 'Local and Remote Connection'
else if you are able to telnet, check the remote db user privilage you are trying to connect.