unable to connect to an instance of SQL server 2005

I have the following setup.

Ubuntu 9.04 with freetds from the repository (.8.2-4) I am trying to
connect to SQL server 2005  on windows 2003 server.

I am trying to follow the steps presented here.
http://procbits.com/2009/03/10/deploying-a-rails-application-on-ubuntu-804-lts-with-phusion-passenger-and-sql-server-2005/

Here is the freetds.conf


[sql_server]
	host = IPADDR
	port = 1433
	tds version = 8.0
	instance = INSTANCE

when I run  sqsh -H sql_server -U user -P password I don't connect.

I also don't connect when I telnet IPADDR 1433 (the connection is refused).

I checked the configuration of the server and it's listening on the
right ip address and port 1433.  I am on the same subnet (through a
VPN) but I can't connect.

Can anybody offer a clue as to why this doesn't work?

11:19:44.311501 10884 (log.c:190):Starting log file for FreeTDS 0.82
        on 2009-08-14 11:19:44 with debug flags 0xffff.
11:19:44.322175 10884 (iconv.c:197):names for ISO-8859-1: ISO-8859-1
11:19:44.322196 10884 (iconv.c:197):names for UTF-8: UTF-8
11:19:44.322209 10884 (iconv.c:197):names for UCS-2LE: UCS-2LE
11:19:44.322221 10884 (iconv.c:197):names for UCS-2BE: UCS-2BE
11:19:44.322232 10884 (iconv.c:363):iconv to convert client-side data
to the "UTF-8" character set
11:19:44.322272 10884 (iconv.c:516):tds_iconv_info_init: converting
"UTF-8"->"UCS-2LE"
11:19:44.322312 10884 (iconv.c:516):tds_iconv_info_init: converting
"ISO-8859-1"->"UCS-2LE"
11:19:44.322325 10884 (net.c:836):tds7_get_instance_port(IPADDR, INSTANCE)
11:19:45.323399 10884 (net.c:905):tds7_get_instance_port: timed out on
try 0 of 16
11:19:46.324453 10884 (net.c:905):tds7_get_instance_port: timed out on
try 1 of 16
11:19:47.325501 10884 (net.c:905):tds7_get_instance_port: timed out on
try 2 of 16
11:19:48.326547 10884 (net.c:905):tds7_get_instance_port: timed out on
try 3 of 16
11:19:49.327594 10884 (net.c:905):tds7_get_instance_port: timed out on
try 4 of 16
11:19:50.328652 10884 (net.c:905):tds7_get_instance_port: timed out on
try 5 of 16
11:19:51.329700 10884 (net.c:905):tds7_get_instance_port: timed out on
try 6 of 16
11:19:52.330746 10884 (net.c:905):tds7_get_instance_port: timed out on
try 7 of 16
11:19:53.331797 10884 (net.c:905):tds7_get_instance_port: timed out on
try 8 of 16
11:19:54.332842 10884 (net.c:905):tds7_get_instance_port: timed out on
try 9 of 16
11:19:55.333965 10884 (net.c:905):tds7_get_instance_port: timed out on
try 10 of 16
11:19:56.335015 10884 (net.c:905):tds7_get_instance_port: timed out on
try 11 of 16
11:19:57.336061 10884 (net.c:905):tds7_get_instance_port: timed out on
try 12 of 16
11:19:58.337106 10884 (net.c:905):tds7_get_instance_port: timed out on
try 13 of 16
11:19:59.338152 10884 (net.c:905):tds7_get_instance_port: timed out on
try 14 of 16
11:20:00.339203 10884 (net.c:905):tds7_get_instance_port: timed out on
try 15 of 16
11:20:00.339253 10884 (net.c:974):instance port is 0
11:20:00.339270 10884 (login.c:418):invalid port number
11:20:00.339289 10884 (mem.c:563):tds_free_all_results()
11:20:00.339322 10884 (ct.c:630):leaving ct_connect() returning 0
11:20:00.339341 10884 (ct.c:334):ct_con_props() action = CS_GET property = 9143
11:20:00.339358 10884 (ct.c:1865):ct_con_drop()
11:20:00.339374 10884 (ct.c:242):ct_exit()