Login failed for user (.Net SqlClient Data Provider)

Hello
I have a dedicated server, which runs windows server 2003 web edition. I access the server using remote desktop. I have installed sqlserver express 2005 on the server, along with management studio express. I have problem running the sql script that would install the database. It says that remote connection is disabled by default on sql express 2005. So this is what I did ( as suggested by this article: http://www.datamasker.com/SSE2005_NetworkCfg.htm):
Enable the TCP/IP protocol using the Surface Area Configuration Utility 
Make sure the TCP/IP protocol is enabled in the SQL Server Configuration Utility 
Make sure the SQL Server browser is started.
Make sure SQL Server and SQL Server Browser are exempted by the firewall on the server machine. sqlservr.exe and sqlbrowser.exe as an exception in the windows firewall

Still no success. Reading various articles on internet, a few suggested i should grant access to certain user by running the following command
osql -E -S %SERVER%\%INSTANCE% -Q "sp_grantlogin 'NT AUTHORITY\NETWORK SERVICE'"

The problem is that i keep getting the error login failed, even when i try to connect to the sqlserver using management studio. When I use remote desktop it logins as administrator.
Can someone please tell me how to rectify the problme.
i would appreciate any help, thanks