I am not directly using SQL, but I assume the C# environment is. I am from a Delphi/Access environment. C# has been no problem but SQL Server has proved a puzzel. I will try to give an exact description of what I am doing:

In SQL Server Express
Right-click Databases and create a new one.
In the NewDatabase dialog, Owner is set to <default>.
Check for other owners. In Select Database Owner dialog, there are no objects listed. Do I need to create a user first?
Create the new database using Owner of <default>, create a new table and run a select query. No error, and the results pane displays the fields from the table. So I assume I am properly connected in SQL Server.

Go to C# Express, create a new project and use Data | Add new data source wizard. In the connection dialog, click the New connection button. In the Add connection dialog Data source is set to Microsoft SQL Server Database File (SqlClient), use Windows authentication, navigate to the database, and select it. I get the error listed in my first post. I have also tried using SQL Server Authentication with my usual passwords.