SQL Error 17

I registered a named instance <servername>\LOCALDEV. I used the wizard.

Backup failed, complaining it couldn't find the server. Note that the server name is NOT LOCALDEV\LOCALDEV

See below

I have no idea why it is trying to connect to a server named <instancename>\<instancename>

Thank you

SQL Backup log file 7.1.0.72

-SQL "BACKUP DATABASE [License_Apps] TO DISK = 'T:\FileTransfer\SGN2SGN\_License_Apps.sqb' WITH ERASEFILES = 1b , CHECKSUM, DISKRETRYINTERVAL = 30, DISKRETRYCOUNT = 10, COMPRESSION = 4, INIT, THREADCOUNT = 3, COPY_ONLY "

----------------------------- ERRORS AND WARNINGS -----------------------------


6/18/2013 1:27:48 PM: Backing up License_Apps (full database) on LOCALDEV instance to:
6/18/2013 1:27:48 PM: T:\FileTransfer\SGN2SGN\_License_Apps.sqb

SQL error 17: [DBNETLIB][ConnectionOpen (Connect()).]SQL Server does not exist or access denied.
Server : LOCALDEV\LOCALDEV
Windows authentication
6/18/2013 1:28:06 PM: Failed to connect to SQL Server instance: LOCALDEV\LOCALDEV