If you are unable to add a new SQL Server DSN in Datasources it is probably due to a missing or corrupt sqlsrv32.rll file in c:windowssystem32.
Extract a new one from MDAC (the version you are currently using) with mdac_typ.exe /C /T:C:destination and copy the file to c:windowssystem32
This has also been known to stop Axapta from starting.