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When connecting in ArcCatalog using the port number and /tcp protocol for service connection parameters, the following error message is displayed:
"Failed to connect to the specified server.
Entry for SDE instance no found in services file."
This error can also occur in previous releases when the services files are not setup correctly. This error is displayed at 9.2 even when the services files are setup correctly.
This is a known problem.
The /tcp protocol included within the service name connection parameter is causing this error message.
Take the /tcp out of the services connection parameter and just use the port number or the service name.
This has been resolved in 9.2 Service Pack 1. See the links in the Related Information section below.