Problems connection to MSSQL server during migration

[r.brandenburg]

On the Source Database wizard panel, when clicking the ... button, I get the following error: "Fetching of list failed. Network error: IOException Connection refused: connect". My SQL database is on the local machine and server running. I have tried with sa account as well as a user account.

If I enter a database name and proceed to the next panel (Target Database) and try to connect, I get the following error:

Connecting to source database and retrieve schemata names.
Initializing JDBC driver ...
Driver class MS SQL JDBC Driver
Opening connection ...
Connection jdbc:jtds:sqlserver://localhost:1433/gracarcom;user=sa;password=
The list of schema names could not be retrieved (error: 0).
Network error IOException: Connection refused: connect
Details:
net.sourceforge.jtds.jdbc.ConnectionJDBC2.<init>(ConnectionJDBC2.java:355)
net.sourceforge.jtds.jdbc.ConnectionJDBC3.<init>(ConnectionJDBC3.java:50)
net.sourceforge.jtds.jdbc.Driver.connect(Driver.java:178)
java.sql.DriverManager.getConnection(Unknown Source)
java.sql.DriverManager.getConnection(Unknown Source)
com.mysql.grt.modules.ReverseEngineeringGeneric.establishConnection(Unknown Source)
com.mysql.grt.modules.ReverseEngineeringMssql.getSchemata(Unknown Source)
sun.reflect.NativeMethodAccessorImpl.invoke0(Native Method)
sun.reflect.NativeMethodAccessorImpl.invoke(Unknown Source)
sun.reflect.DelegatingMethodAccessorImpl.invoke(Unknown Source)
java.lang.reflect.Method.invoke(Unknown Source)
com.mysql.grt.Grt.callModuleFunction(Unknown Source)

Are there any special permissions / etc that need to be granted to the sa / user accounts to allow connection? I have verified that all the usernames/passwords work.

TIA.