Either the SQL Server version on the remote server is less than or equal to 7.0 or SQL Server is not properly installed on ...

Either the SQL Server version on the remote server is less than or equal to 7.0 or SQL Server is not properly installed on the remote server. Upgrading the remote server to SQL Server version > 7.0 will fix the former problem while re-running SQL Server setup on the remote server again may fix the latter problem.