VS 2010 and Azure local storage utility DSInit

Looks like, by default it is configured to use SQL Server Express. You have to use DSInit utility to let it use your SQL Server 2008 Standard/Enterprise edition.

You will see the following run time error if SQL Server Express is not installed.

Windows Azure Tools: Failed to initialize the Development Storage service. Unable to start Development Storage. Failed to start Development Storage: the SQL Server instance ‘localhost\SQLExpress’ could not be found. Please configure the SQL Server instance for Development Storage using the ‘DSInit’ utility in the Windows Azure SDK.