We had the same problem here because the machine running the Episerver Manager (220.127.116.11 in our case) - was not a member of the domain.
The machine running the manager was not in the domain but the machine hosting the sql server (2005) database was in the domain. The Administrator account on both machines had different passwords. (noted this in case it makes any difference)
All the above didnt work for us - but adding the comptuer to the domain and theafter logging into the machine with a domain user that the sql server machine recognised worked perfectly - problem solved.
Hope this helps
Also - make sure you close and reopen your browser as some cache the site. Even refreshing doesn't get rid of the cached code.
And restart IIS.