Courtesy of Rob Mitchell who wrestled with this Error message when you install Microsoft Management Reporter Server: “An error occurred while creating the database”
Oddly the solution for this is that:
You must install SQL Compact Edition SP2 for Windows Desktop on the computer that you are running the Management Reporter Server installation from. You can download the SQL Compact Edition SP2 for Windows Desktop from the following link:
You must install both the x86 and x64 version if you are using an x64 operating system.
Not intuitive at all. On the plus side this does come up near the top of the results on MyGPSearch.com when searching this error. It’s KB 2406948.