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What machine is the TT server on that you are trying to connect to? Is it the local server on the Windows machine or on a different machine? First, I would check the Client DSN definition to make sure it is correct. Second I would check the XP firewall settings to make sure they are not blocking anything needed by TimesTen client/server. Third, look in the TT error log to see if there are additional error messages that might be helpful.
Just in case of someone gets the same problem.
This error can also be resolved by increasing the SQLQueryTimeout connection attribute. It seems that the default value is 59 seconds.