Sql-server – Connection to local SQL Server 2012 can be established from SSMS 2008 but not from SSMS 2012

Whatever username you are using on the "remote" machine must be set up on the "server" machine.

So, if you are logged-in to "remote" as "John," there must be a "John" user on the machine that is hosting SQL Server 2008 Express, and unless you are going to provide different credentials, it should have the same password, too.

Since you are running in a workgroup the only possible authentication is one using 'mirrored NT accounts', which means that the process trying to authenticate must be running under an identity that is 'mirrored' on the host that is authenticating the process. 'Mirrored' accounts are distinct local accounts with identical name and password on both hosts doing the authentication.

So it must follow that you're running SSMS from an account that it is mirrored on the SQL Server host (eg. <computername>\Administrator, which is mirrored by the <sqlhost>\Administrator and has the same password). Note that UAC has nothing to do here (ie running as administrator will not help).

Your application is probably running under a different local account (default IIS appool perhaps?) and the account under which the application runs is not mirrored on the SQL Server host.

Your best solution is to ditch the makeshift network and deploy a proper AD (domain). As an interim, make sure you run your application under an account that is mirrored on thew SQL Server host machine.