If you have an Active Directory, and/or a Domain Based DFS setup, you're probably familiar with Ultrasound. It's Microsoft's graphical FRS monitoring tool. It provides a wealth of information, and logging capabilities.
Anyway, I went ahead and set it up on my workstation yesterday, which also happened to be hosting the SQL instance Ultrasound required. During setup, I specified the SQL Server using (local) notation. Setup created the database fine. Ultrasound, for whatever reason refused to contact the database though. I started poking through the help file today, and low and behold, here's a topic about how you have to specify the FQDN or NetBIOS name of the SQL box, not localhost, or something like that. I uninstalled & reinstalled with this in mind, and, guess what? Ultrasound works like a charm!
Why in the world does the setup program even accept (local) or localhost if the program won't work? Beats me.