I use the following.
mssql2://user:pwd@servername\instance/databasename
for connecting to mssql 2016
I have my webserver apache and web2py running in windows8.
mssql in windows 2016 server.
In servername I use the IP of the machine.
In instancename I have SQL16S7INS1 --- the instance name created by me when installing mssql
In databasename I have ocms_nlc ---- which is the database I have created in mssql
In username I give sa. You can give restricted username also if you have created one and given permission for that user to the concerned database.