I have been creating some new dev envionments using Windows 2008 and Hyper-V and we came across a problem where the SharePoint Configuration Wizard could not connect to the SQL Server to create the Sharepoint Config database.

 

I finally tracked this problem down to having Windows Firewall on on the SQL box.  Configure the firewall off (Not recommended) and everything burst into life.  So if you hit this problem configure the Windows firewall on the SQL box to open the appropriate ports to allow SQL logins to occur.