What version is SQL Server? There was a cumulative update to SQL Server 2019 recently which caused a lot of problems.
When creating the System DSN, does it work with an IP address as opposed to the hostname, i.e.
xxx.xxx.xxx.xxx\SQLEXPRESS
Is the SQL Server instance using dynamic ports and it's maybe decided to use a different one?
Does it work if you explicitly supply the port number?
Does SQL Server Management Studio connect ?
Have you restarted the SQL Server box and\or SQL Server services ?