I believe the error you are getting is pretty self explanatory !
You have not specified which version SQL server you are trying to connect, but you have got a higher version database (SQL 2008) and you are trying to connect it using old SSMS which is not allowed.
You need to download/install newer SSMS from
http://msdn.microsoft.com/en-us/library/ms365247.aspx[
^]
Hope that helps
Milind