Login failed for sql user

I purchase windows 2008 web server edition and sql server 2008 web edition.

They are both installed on two different boxes on the same network.

The sql server 2008 web  edition is installed on a windows vista ultima operating system.

I created a local user on both boxes SQLIISUser, same password.

In the anonymous authentication for IIS7 for the website, I have added the SQLIISUser and it's password.

On the database server, I have added the user to the security for the database with its password. I gave the user dbreader and dbwriter permissions.

From visual studio 2008, when running in localhost to the remote database, I can connect fine. But when connecting live from the web, I get this error:
Exception Details: System.Data.SqlClient.SqlException: Login failed for user

Also, I did create the user using sql server authentication on the database server, but the connection string in the web config uses windows authentication.

Please help me get these two boxes to communicate.

My hardware firewall does have the two sql ports open, 1433-1434 for tcp and udp.

And yes, both boxes can communicate with one another via the network.

thanks.