1. Open CMD prompt2. Type set SDEFORCEXDR=13. Type in same CMD windows "C:\Program Files (x86)\ArcGIS\Bin\ArcCatalog.exe" to open ArcCatalog4. Create an sde database connection without fully qualifying the server nameRESULTS: Connection will be successful.b) Also setting SDEFORCEXDR=0 also resolved the issue.c) Another workaround was to provide fully qualified domain name with server name or IP Address in the Server column in Spatial Database Connection.