This is a bit of a long-shot, as I don't have Sql Server 2008 installed, only the 2014 version. And maybe you've tried this already, but I spent hours on this problem before I found the step I was missing.
Assuming a utility like MS's PortQry shows the server's local network firewall is open and that your edition of 2008 comes with a copy of Sql Server Management Studio installed:
Start SSMS on the server,
Right-click the Sql Server's Properties
In the Properties pop-up, click the Connections tab
Check the checkbox "Allow remote connections to this server."
In some Sql Server editions, "Allow remote connections ..." is not check by default, which seems to square with marc_s's comment.
Update: Regarding your added "This tells me that it is not using the user ID specified in the connect string.":
If you open the DFM as text and hand-edit the connection string so that the "User ID" has a completely bogus value, then go back to the connection string builder, you should find two things:
The Enter information to log on to server reverts to Use a specific user name and password, so if you then click Test connection, the test unsurprisingly fails.
If you then select Use Windows NT Integrated security and click Test connection again, the test succeeds.
From 2., it is evident that the "User ID" in the connection string is ignored when using Windows authentication. That doesn't seem surprising to me, since the point of using Windows authentication is that the credentials used are those of the logged-in Windows user. You've already established that if you log in on the other computer as an admin (I assume you mean a Windows administrator account), the connection succeeds, so I'd have thought that the non-admin account needs to be added to the Sql Server's recognised users if you're wanting to connect using that ID (though I confess it's not at all clear to me whether you're actually trying to connect using Windows authentication of a specific Sql Server account).
If you're still stuck try using e.g. the Microsoft OLE DB Driver for SQL Server instead of the SQL Server Native Client. You might also single-step through this article:
https://social.msdn.microsoft.com/Forums/en-US/523c7b7e-6216-4790-87cb-945f3c1f4c5e/can-not-connect-to-microsoft-sql-server-express-2012?forum=sqlexpress
Also, google
sql server express 2008 remote "secpol.msc"
and note articles such as this one
https://social.msdn.microsoft.com/forums/sqlserver/en-US/1f5221bf-f5c3-4307-836b-a4f9dc07f02f/very-strange-remote-connection-issues