- Open the SQL Server Configuration Manager (Start > SQL Server 2008 > Configuration Tools > SQL Server Configuration Manager
- Navigate to the SQL Server Network Configuration > Protocols for MSSQLSERVER node in the tree view
- Enable TCP/IP and Named Pipes (you’ll be warned that these changes will not apply until you the service is shut down)
That will allow you when installing SPS 2010 to connect to a SQL 2008 Server. This took 4 hours to finally figure out.