Before SQL Express will allow connections from a remote computer, you must use the Surface Area Configuration Tool to enable access via TCP/IP.
Firewall Considerations
If you are behind any other firewalls and require client connection from outside the firewall, you must forward TCP port 1433 to your database server.
If you are using the built in Windows 2003 or XP firewall, you must create an exception to allow incoming connections on 1433