I had a strange problem trying to use the SQL Server 2005 Express, (this is the built in DB that come with the VS2005 installation).

The Problem & MS solution:
I need to install on my laptop a local DB, but I don't want to install the full version of SQL Server 2005. Microsoft gave us a great tool which you already installed in your VS2005 installation the: SQL Server 2005 Express.

There are still things to fix:
There is only one problem with this cool tool, you cannot connect to this DB, create new one or even do something useful with this tool.

So you are trying the first idea on your mind, in VS server explorer -> add new DB, choosing you compute name as the Server Name(in combo box, it is already there so it must work, isn't it?).

Only one server-name for you man!

Giving meaningful, descriptive name to your DB (e.g. DB1).

New DB name is now available

But you can't, it won't recognize the SQL Server 2005 Express.

My Solution:
In the Server name you will have to write: .\SQLExpress.
Everything else that I've tried failed, such as: MyCompuerName, SQLExpress, local.

Try it yourself.