Is your CMDB database set to accept remote connections? (I knew this was an issue way back in NS6, and you had to manually set this up to connect to the database)
You can query that error for more info: a connection was successfully established with the server but then an error occurred during the login process
See this post for some info
http://social.msdn.microsoft.com/Forums/en-US/sqldatabasemirroring/thread/98e580dd-e12f-447f-9a0b-253b7be4d8e2/