User is not associated with a trusted SQL Server connection

Login failed for user 'username'. The user is not associated with a trusted SQL Server connection.

This is a common error when setting up SQL Server instances from scratch and takes just 30 secs to fix.

Basically the SQL server instance you are conecting to has been configured to operate in Windows Authentication Mode and doesn't allow the use of SQL accounts. So change the Authentication Mode of the SQL server from Windows Authentication Mode to Mixed Mode (Windows Authentication and SQL Server Authentication). To do this right click your SQL Server instance in Enterprise Manager/Management Studio, select security and you should see the option in there. Hope you didn't waste as much time as I did on this :)