The Cognos Test Connection and Operational Dashboard fail to connect

[#1]

Summary

The Cognos Test Connection and Operational Dashboard fail to connect.

Synopsis

The Cognos Test Connection and Operational Dashboard fail to connect. Base FNM installation is fully operational. New installation of FlexNet Report Designer on dedicated COGNOS server with MS SQL 2008 Server apparently completed successfully. The firewalls on both systems have been fully opened to each other. Have also turned off the firewalls completely to see if it would solve the problem. It did not.

FlexNet Report Server log
2013-10-24 09:47:13,534 WARN [reporting.cognos] [WorkerThread#1[146.165.240.160:51478]] Testing cognos connection with these parameters -host:edcognos
webPort:8889
sendPoint:http://edcognos:9300/p2pd/serv let/dispatch
dbType(reporting DB):db.type.sqlserver
dbUserName(reporting DB):flexnetreporting
2013-10-24 09:47:13,534 WARN [reporting.cognos] [WorkerThread#1[146.165.240.160:51478]] Please check the cognos configuration to see if the autheticator is configured and ananymous access is turned off.
2013-10-24 10:20:52,848 INFO [reporting.cognos] [WorkerThread#1[146.165.240.160:51875]] Check connectivity...
2013-10-24 10:20:52,849 INFO [reporting.cognos] [WorkerThread#1[146.165.240.160:51875]] Getting config info...
2013-10-24 10:20:52,849 WARN [reporting.cognos] [WorkerThread#1[146.165.240.160:51875]] 'localhost' will work only if the Cognos is running on the 'localhost'.
2013-10-24 10:20:53,858 INFO [reporting.cognos] [WorkerThread#1[146.165.240.160:51875]] Ping returned with success.
2013-10-24 10:20:54,029 INFO [reporting.cognos] [WorkerThread#1[146.165.240.160:51875]] Apache is running, Cognos is running and is deployed to Apache succesfully.
2013-10-24 10:20:54,359 INFO [reporting.cognos] [WorkerThread#1[146.165.240.160:51875]] Connect to Cognos Dispatcher succesful.
2013-10-24 10:20:54,791 ERROR [reporting.cognos] [WorkerThread#1[146.165.240.160:51875]] testDataSource() failed.
AxisFault

Discussion

Cognos Reporting
Launch (drop down)
IBM Cognos Administration
Configuration Tab
FNMAdminDS
Set Properties
Connection Tab
Connection String contains "DataSource=localhost,1433"
Clicking ?Test the Connection? results in a failed attempt to connect.
Edit connecton string
Change "localhost" to "edflexmgr"
?Test the connection? - succeeds

Do same for Reporting database

Additional Information

-Please verify if apache is service is running