Creating new Data Source Error - Database connection Failed

Question

Successfully installed and configured 11.1.1.3.0. Planning and Essbase dev.
Went to Workspace > Administer > Classing Planning Administration > Manage Data Sources > Create Data Source.
Entered all info about the application database , etc. Getting error "The database connection failed" (I was able to connect with no problem during the install)
SQL server 2005 is on the same physical server.
The diagnostic tool shows database connection passed for planning. A new database was created for the new application.
The server event viewer shows these errors.
"Login failed for user 'xxx-hyperion'. The user is not associated with a trusted SQL Server connection."
Group Policy Error "The client-side extension could not apply computer policy settings for 'Default Domain Policy {xxx}' because it failed with error code '0x80070003 The system cannot find the path specified.' See trace file for more details. "
The Group Policy client-side extension Group Policy Services failed to execute. Please look for any errors reported earlier by that extension.
Any help is appreciated.

Answer 1

Datasource for the application.
I have created a sql db for this planning application (my datasource). See my first message for more details.
When you create a new planning application, you need to associate it with a data source. Since this is a new install, I don't have any data sources available yet.
So, "To create, edit or delete data sources, click Manage Data Source."
This page lets you validate your connection to the database and essbase server. My essbase server connection validates! The database connection does not validate after I enter all the relevant information.
SCREEN INFO BELOW
Fields displayed with an asterisk (*) are mandatory.
Data Source Name *:
Data Source Description:
Select Database Platform
Microsoft SQL Server
Application Database
Server * :
Port * :
Database *:
User *:
Password *:
Click "Validate Database Connection"
ERROR ---> Database connection failed.
So it does not let me create a data source for my new planning application, so I cannot create a new planning application.
Thanks in advance.