Problem: A red exclamation mark appears next to the layer in the Table Of Contents when you add a layerfile that references data in an SDE database. 

Or you get the following error message when trying to connect to an sde connection.
Here's a link to more information from ESRI about the problem.

Solution: One reason for not being able to open layer files or ArcSDE connection files on \\\gisdata is that the installation of ArcGIS 10.x is incomplete. The missing part is the SQL Server Native Client driver. 
  • First check if you have the SQL Server 2012 Native Client installed
    • Start > Control Panel > Programs and Features
    • Look through the list of installed programs, if you don't see Microsoft SQL Server 2012 Native Client you must install it.
  • If it is installed, this solution will not work! 
  • If it's not installed

 Added  Thu Feb 09 20:21:40 CET 2017   by MatsEmbedded Image