I was able to finally successfully connect via filling in Database/User/Password and leaving Host empty, where Database is the name of the ODBC connection name.
Database Desktop THEN successfully looked up the connection details per Windows Control Panel.
Glad you succeeded.
I don't think Database Desktop uses the connection details of any connection saved in the ODBC Control Panel. Aren't the names of your SQL Server database (e.g. master) and your ODBC connection name the same? If they're not, that would be very interesting...
To test, try connecting to the master database which should always be there...
(I've got a small application with connection to SQL Server myself; I specify these strings as the params of the ODBCConnection object:
Database=<databasename note doesn't have to have an ODBC entry>
Server=.\SQLEXPRESS
Trusted_Connection=Yes
(leave the DatabaseName, Username, Password and HostName properties of the ODBConnection object empty)
It connects to a database on the SQLExpress instance on the local host and uses trusted authentication.
As you found out, you therefore need to specify host, database, user, password yourself.
I don't suppose there's an SQL Server example tutorial on the wiki? If not, and when I have time, I'll try to create one.