unable to connect ASP to SQL 2005 database through web.config

Ok, so our company decided to move our hosting from external to internal to save costs. I have attached the SQL database to our sql server(MSSQL2005), and placed the ASP 2.0 code on our web server(win2003R2 with IIS). I get the following error:

An error has occurred while establishing a connection to the server.  When connecting to SQL Server 2005, this failure may be caused by the fact that under the default settings SQL Server does not allow remote connections. (provider: Named Pipes Provider, error: 40 - Could not open a connection to SQL Server)

Now what i did was go to the properties of the web config through the IIS and set the connection string like this;
Key
connectionString=server=SQLServername\InstanceName;uid=Username;pwd=Password;database=DatabaseName

This did nothing, then I noticed this.
LocalSqlServer=data source=.\SQLEXPRESS;Integrated Security=SSPI;AttachDBFilename=|DataDirectory|aspnetdb.mdf;User Instance=true

I know basic coding but this throws me completely. Is this a file I am suppose to have?  If not, can anyone please help me get this website up? I am completely lostStart Free Trial