System.Data.SqlClient.SqlException: Login failed for user '(username)'.

The first thing to check is whether the SQL Server is configured to use Mixed Mode Authentication or Integrated Authentication.

To do that, perform the following steps :-

1. Click Start - Programs - Microsoft SQL Server - Enterprise Manager to open the Enterprise Manager.
2. Connect to the appropriate Server if the SQL is a client installation.
3. Right click on the Server Node and click on Properties.
4. This opens the Properties Dialog.
5. Switch to the Security Tab.
6. Under the Security section, make sure the Option SQL Server and Windows is selected.
7. This ensures that your SQL Server is running under Mixed Mode Authentication.

The Next step is to ensure that the ASPNET account (IIS_WPG in case of Windows server 2003) has the appropriate access to the Database.

To do that, perform the following steps:

1. Open SQL Server Enterprise Manager (Start - Programs - Microsoft SQL Server - Enterprise Manager), select the appropriate server, and expand the Security folder.
2. In the Logins check whether the IIS_WPG is listed.
3. If it is not listed, right-click on Logins and select New Login
4. In the Name: textbox either enter [Server/Domain Name]\IIS_WPG or click on the ellipses button to open the Windows NT user/group picker.
5. Select the current machine’s IIS_WPG group and click Add and OK to close the picker. 
6. You then need to also set the default database and the permissions to access the database. To set the default database choose from the drop down list,
7. Next, click on the Database Access tab and specify the permissions.
8. Click on the Permit checkbox for every database that you wish to allow access to. You will also need to select database roles, checking db_owner will ensure your login has all necessary permissions to manage and use the selected database. 
9. Click OK to exit the property dialog. 

Your ASP.NET application is now configured to support integrated SQL Server authentication. 

http://www.eggheadcafe.com/community/aspnet/13/10190575/login-failed-for-user.aspx.