SEP 12RU3 not connecting to SQL database - Unexpected error

Recently upgraded from SEP 12RU2 to SEP 12RU3 almost a week ago. The SQL server is online, I am able to telnet to the SQL port. I can logon to the SQL server and check that the DB is online via SQL management studio, however when I try to logon from the SEPM console - I get an unexpected error. The SEPM services also dont want to stay running.

I tried doing a repair to the SEPM. Then ran the Management Server config wizard and when I try to test the SQL connection - on STEP 2: Existing
database parameters - with the correct database name, username and password used to test connection , an error " Failed to add server" comes up?

What else can I do to troubleshoot??