Please note that I am able to access the database via the EEPC Manager
probably it's trying to build a name cache? But yes, it's entirely possible. The API, like SBAdmin.exe, can use either form of connection.
Since it's failing so early (during the login), a name cache build is the usual slowdown here - if you have a lot of objects that can take a few minutes if not longer to build out - you can probably see this by monitoring the folder with something like filemon from systeinternals - if there's a lot of activity in the .names files, that's what's going on.