1The Data Source key is used to find the machine on which the Sql Server instance runs.
2You can have different strings for it but the most common used in a LAN environment is composed using the name of the server machine followed by an eventual instance name.
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4So, if your local PC is named GURUBEAST-PC and, at install time, you haven't specified any instance name, the connectionstring Data Source contains only the name of the machine GURUBEAST-PC. If you have an instance name then you should add that instance name to you Data Source key. GURUBEAST-PC\GURUSQL
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6This will guarantee to all the PC in the same LAN the possibility to have the same connectionstring also if the connection is made from the same PC where the SQL Server runs.
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8If the Data Source points at the local pc, you can use many shortcuts to represent the local PC:
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10(LOCAL)
11localhost
12.
13\.
14and eventually add the instance name to these shortcuts without repeating the PC name