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I am having one application built in C# winforms. In the backend I am using SQLSERVER 2008 Express. The application is used remotely through thin clients.

My problem is that when one user is using my software and a 2nd user tries to open the software and tries to make any operation on the database, the database refuses to connect. Only when the first user closes the application, the second user can operate the database queries.

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Since 2000 the SQLExpress versions can handle multiple concurrent connections, so that should work, although there are some limitations such as usable RAM, as explained in this SO answer.

Is there a chance that you are reaching the limits, which would result in the DB rejecting any further connections?

You of course have to be aware that two users cannot at the same time edit the exact same table or at least table portion (depending on the exact action: read vs. update). So if locks are open on a table/record, the second user has to wait until those are removed to also edit the DB record. But those locks should only be present for a really short time.

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