WSUS on server 2012 fails to open

Question

I successfully installed WSUS role on server 2012 R2 and pointed its database to SQL 2012 during installation. I was prompted to specify the instance name, but since the sql is installed on the same server I entered the server name as was able to verify
the connection. Database was successfully created in SQL, but when I try to open WSUS console, it opens up but does not connect to its service.
Came across someone else's post with a similar problem, but using wsusutil.exe postinstall SQL_INSTANCE_NAME=<database server name> fails.
http://blogs.technet.com/b/reshard_sharps_blog/archive/2013/08/18/wsus-post-deployment-configuration-fails.aspx
I didn't specify  CONTENT_DIR=C:\Wsus as I don't want to store updates locally until additional storage becomes available.
PS C:\Program Files\Update Services\tools> .\WsusUtil.exe postinstall SQL_INSTANCE_NAME=W2012\mssqlserver
Log file is located at C:\Users\Administrator\AppData\Local\Temp\2\tmpC758.tmp
Post install is starting Fatal Error: A network-related or instance-specific error occurred while establishing a connection to SQL Server. The server was not found or was not accessible. Verify that the instance name is correct and that SQL Server is configured
to allow remote connections. (provider: SQL Network Interfaces, error: 25 - Connection string is not valid)

Answer 1

2014-03-31 16:40:46  Importing SQLServer.xml...
2014-03-31 16:40:46  Importing WindowsXP64BitEditionVersion2003.xml...
2014-03-31 16:40:46  Importing DefinitionUpdateSusXml.xml...
2014-03-31 16:40:46  Importing ClientServicingApiDetectoid.xml...
2014-03-31 16:40:46  Importing default detectoids succeeded.
2014-03-31 16:40:48  Synchronization in progress. Please cancel synchronization and rerun postinstall again. Exception: System.Net.WebException: The request failed with HTTP status 503: Service Unavailable.
   at System.Web.Services.Protocols.SoapHttpClientProtocol.ReadResponse(SoapClientMessage message, WebResponse response, Stream responseStream, Boolean asyncCall)
   at System.Web.Services.Protocols.SoapHttpClientProtocol.Invoke(String methodName, Object[] parameters)
   at Microsoft.UpdateServices.Internal.ApiRemoting.GetServerVersion()
   at Microsoft.UpdateServices.Internal.DatabaseAccess.AdminDataAccessProxy.GetServerVersion()
   at Microsoft.UpdateServices.Internal.BaseApi.UpdateServer.CreateUpdateServer(String serverName, Boolean useSecureConnection, Int32 portNumber)
   at Microsoft.UpdateServices.Internal.BaseApi.UpdateServer..ctor(Boolean bypassApiRemoting)
   at Microsoft.UpdateServices.Setup.StartServer.StartServer.FixSubscriptionCategories()
2014-03-31 16:40:48  StartServer encountered errors. Exception=Synchronization in progress. Please cancel synchronization and run postinstall again.
2014-03-31 16:40:48  Microsoft.UpdateServices.Administration.CommandException: Failed to start and configure the WSUS service
   at Microsoft.UpdateServices.Administration.PostInstall.Run()
   at Microsoft.UpdateServices.Administration.PostInstall.Execute(String[] arguments)