[sql] Unable to connect to SQL Express "Error: 26-Error Locating Server/Instance Specified)

I had a similar problem which was solved by going to the "SQL Server Configuration Manager" and making sure that the "SQL Server Browser" was configured to start automatically and was started.

I came across this solution in the answer of this forum post: http://social.msdn.microsoft.com/Forums/en-US/sqlexpress/thread/8cdc71eb-6929-4ae8-a5a8-c1f461bd61b4/

I hope this helps somebody out there.