Hi Erel,
Yes, the SQL Server is on the same machine, it is a VM on a Mac at the moment, but I am buying a PC to run it off. I will try updating to the second version, but I am not sure that will help if I can't get past the stage of connecting to a database. Do you think it could be the JDBC driver? I have downloaded the version from Microsoft and the tdbc shown in your tutorial, however I think the instance may be throwing things off?