When you first install SQL Server 2008 Express, the TCP/IP protocol is disabled by default. Be sure the protocol is enabled (which requires restarting the service) before you try to run an application that depends on it, otherwise you could spend hours trying to figure out why your application won’t work. It looks like SQL Server 2008 R2 Developer behaves the same way.
I suggested this awhile back to a co-worker who’d been struggling all day with why an application wasn’t working, and it turned out to be the solution.