A network-related or instance-specific error occurred while establishing a connection to SQL Server.

Problem: A network-related or instance-specific error occurred while establishing a connection to SQL Server.
Server OS: windows 2008
Client OS: Windows 7

Solution: Open outbound port on client machine, and open inbound port on server
1.On Server - Open outbound port by adding a new rule for port 1433 in firewall at server machine
2.On Client - Open inbound port by adding a new rule for port 1433 in firewall at client machine

See the sample "How to add rule for inbound/outbound port"