Adding a table in the .dbml file by drag and drop in Visual Studio 2017 community edition generates this error.
Failed to retrieve data for this request. Failed to connect to server 10.1.2.3. Login failed for user 'user'.
I am able to log in and view the tables and views in the SQL Server Object Explorer.
NB: It was working on VS 2015 before updating. Adding SP still works.
I encountered this same problem today in VS 2017 15.7.5. I right-clicked on the connection in the Server Explorer, opened the Modify Connection box and checked the Save My Password box and it began working again.