SQL Server 2008 encrypted connection using multiple server names
I'm pretty sure that you'll need a certificate which has multiple CNs not one with DNS entries.


  The certificate was generated using Web Server template.


I don't think that's the correct template.  I don't have access to a CA at the moment, but I don't think that template uses the correct server authentication certificate. The note in my book says:


  
    The certificate must be a server authentication certificate that requires the Enhanced Key Usage property of the certificate to specify Server Authentication (1.3.6.1.5.5.7.3.1). The certificate must also be created using the KeySpec option of AT_KEYEXCHANGE; optionally the key usage property will include key encipherment.