Microsoft Dynamics CRM 4.0 is supported with the following SQL Server Editions:
- SQL Server 2005 Standard, Enterprise, Developer (all with SP2)
- SQL Server 2005 Workgroup with SP2 - supported only if CRM is installed on Small Business Server
- SQL Server 2005 Standard, Enterprise, Developer x64 (all with SP2)
- SQL Server 2008 Standard, Enterprise
- SQL Server 2008 Standard, Enterprise (x64)
Review www.microsoft.com/kb/957053 for more details on setup updates required if using SQL Server 2008.
CRM will work with Default and Named Instances of SQL Server.