[2008] Problem Connection to SQL Server 2005

Help I am unable to create a database in SQL Server 2005
(YES I DO HAVE IT INSTALLED ! :P)

What I am doing:

>>Hold mouse over server explorer tab

>>Right click data connections

>>Select create new sql server database

(Note, below Data Connections is 'Servers', and if I expand that node, I see 'Icyculyr', which is what I assume to be my server?)

>>once the Create New SQL Database dialog has shown up

>> I type into the server name text box 'Icyculyr'

>>in the Log on to the server, I select the radio button 'Use Windows Authentication'

>>I type "testDB" in the 'New database name' text box

I get an error:

'An error occurred while establishing a connection to the server. When connection to SQL Server 2005, this failure may be caused by the fact that under the default settings SQL Server does not allow remote connections. (provider: Named Pipes Provider, error:40 - Could not open a connection to SQL Server'

which I have tried to fix with no success...

Can anyone help me with this?

Thanks