Symptoms

We have issues to open k2 designer (spinning long time and error out: server error, time out). After re-run K2 smartform configuration wizard. Now both of K2 designer and management error out: "A network-related or instance-specific error occurred while establishing a connection to SQL: server. The server was not found or was not accessible....."
 

Diagnoses

The issue was caused by .NET Authorization Rules was set to allow for specific group on K2 site.
 

Resolution

Removing the rule to allow all users access to .NET resolved the issue.