Hi there,
Error 1326 means "Logon failure: unknown user name or bad password." This error is raised because the IIS Service does not have any rights to use the named pipe.
Assure that no firewall port is blocked according to http://technet.microsoft.com/en-us/library/dd772723(WS.10).aspx
The below thread discusses the same issue and you can try out some troubleshooting steps
from this and see if that helps you to sort the Issue.
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