Hi Mike,
Error 98, invalid message, in this instance implies you don't have a database login dialog included in your source. Perhaps try including the standard package, DatabaseLoginDialog.dg, and see if you can manually enter the credentials.
Although this does sound like it's the workstation having problems connecting to the database engine. When this occurs I usually start by creating a UDL file on the desktop e.g. servertest.udl. Edit the connection tab accordingly and click the Test Connection button. If this fails the problem usually lies with server i.e. firewall, ports, permissions etc. If this passes the problem usually lies with the application i.e. driver, managed connection configuration etc.