My server is not in n/w
I don't understand what "n/w" means.
yes i allow sql authentication.
OK, so is your server configured to accept TCP/IP traffic?
What you mean by firewall between application and server???
Just that - are these any firewalls between whatever machine your application runs on and whatever machine your SQL Server instance lives on.
Also, is your SQL Server 2000 instance patched to the latest version? Very (very!) early versions of SQL Server 2000 had issues with TCP/IP DLLs missbehaving.