CRM 3.0's install didn't support named instances. There is a way to work around this though. You need to "disable" the environment diagnostics wizard that does this check. You should first go through the "normal" process with this enabled to ensure all other issues are taken care of, then create a reg entry called "IgnoreChecks" of type DWORD under the following location: HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\MSCRM
Then, set this value to 1 and rerun the installation.