SqlClient logon failed for domain user with sysadmin role

SqlClient logon failed for domain user with sysadmin role

I have just installed an application that uses SQL Server Express 2005 SP4
on a Windows 7 machine. This is an application that had been working fine
for many years with SQL Server Express 2005 SP1 on a Windows XP machine
and am getting the following error when running the application:
System.Data.SqlClient.SqlException: Login failed for user 'MGROUPNET\jg2'.
at System.Data.SqlClient.SqlInternalConnection.OnError(SqlException
exception, Boolean breakConnection)
I use the following connection string in the application (PATHNAME and
INSTANCENAME are properly replaced at runtime):
Data Source=.\INSTANCENAME;AttachDbFilename=PATHNAME\AIMobile.mdf;Integrated
Security=True;User Instance=True;MultipleActiveResultSets=True;Connection
Timeout=300;
The most interesting part of this is that the user in question can log
into the SQLEXPRESS instance using SQL Server Management Studio 2012 which
is also installed on the machine. The user has sysadmin privilages
according to SSMS 2012.
Why does SQL Client not realizethat the user can login?