Problem connecting to database Sharepoint 2010 server farm (no active directory)

When configuring Sharepoint 2010 and trying to connect to SQL Server 2008 database ;
executing PowerShell command (New-SPConfigurationDatabase) as admin

I get the following error:
Cannot connect to database master at SQL server at {ServerName}. The database might not exist, or the current user does not have permission to connect to it.

Environment:
SQL Server 2008 R2  (separate box)
SharePoint 2008        (separate box)

Windows Server 2008 R2
ActiveDirectory: NONE

Confirmed and verified the following;
- Checked roles are set for spfarm (dbcreator, public, securityadmin)
- Enabled SQLBrowser Service
- Verified TCP/IP is enabled
- Verified mapping to Master database
lorgnettesolutionsAsked:
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Justin SmithSr. System EngineerCommented:
I'm assuming spfarm is the account running the SharePoint Timer Service.

Did you verify the account you are logged in as has access in SQL as well?
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lorgnettesolutionsAuthor Commented:
ACH1LLES, correct.
Yes we did verify our account has access in SQL.

Part of our problem is that since we can't use active directory, we have to create the same admin user on both servers,

In example:
Server1 has SQL Server and a local user called server1\admin (which also has db access)
Server2 has Sharepoint and a local user called server2\admin
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Rainer JeschorCommented:
Hi,
can you please post the complete command you have used?
Did you create the farm credentials the right way?
http://sharepoint.stackexchange.com/questions/20242/why-does-new-spconfigurationdatabase-fail

Thanks.
Rainer
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lorgnettesolutionsAuthor Commented:
We resolved this issue some time ago.  Even though we did not have Active Directory the following worked:
spfarm account created in windows on both servers (sharepoint server and database server)
spfarm was granted database access (high level permissions)
executed the following line in Powershell: NewSp-ConfigurationDatabase
then entered the name of the new db, the server and the user credentials using the local account and domain (i.e. server1\spfarm)
once the database was created and connected, opened configuration wizard and step through the rest of the sharepoint configuration.
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lorgnettesolutionsAuthor Commented:
resolved issue before getting a comprehensive response
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lorgnettesolutionsAuthor Commented:
resolved issue before getting a comprehensive response.
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