A timeout can be caused by a couple of things. One is that the installer can't find the database at the location/port you indicated. Double check these and make sure that the server you are installing on can ping the GP server.
Second is to make sure you are running the installer as a domain admin or that the service install is being run with an account with admin rights on the SQL Server. Most GP add-ons require admin permissions to install and function properly. (If you don't have admin rights and the server is locked down, it - properly - won't even tell you that access has been denied due to insufficient privileges. I recommend using a service or other dedicated account for things like this rather than a personal login.
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