I've installed the Azure Tools for visual studio 2010, and then tried to debug a simple hello world application. Then i've got the following error:
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.
I do not have SQLExpress installed, but the full version of sql server 2008R2.
This message told me to use the "DSInit" utility for setting up some ports and the storage database.
But when i've executed this query, i've got this:
Failed to create database 'DevelopmentStorageDb20090919' : A network-related or instance-specific error occurred while establishing a connection to SQL Server. The server was not found or was not accessible. Verify that the instance name is correct and that SQL Server is configured to allow remote connections. (provider: SQL Network Interfaces, error: 26 - Error Locating Server/Instance Specified)
One or more initialization actions failed. The development storage cannot be used without resolving these errors.

Now, i've checked the InstanceName of my sql server:
set nocount on
Declare @key Varchar(100), @PortNumber varchar(20)
if charindex('\',CONVERT(char(20), SERVERPROPERTY('servername')),0) <>0
begin
set @key = 'SOFTWARE\MICROSOFT\Microsoft SQL Server\'+@@servicename+'\MSSQLServer\Supersocketnetlib\TCP'
end
else
begin
set @key = 'SOFTWARE\MICROSOFT\MSSQLServer\MSSQLServer\Supersocketnetlib\TCP'
end
EXEC master..xp_regread @rootkey='HKEY_LOCAL_MACHINE', @key=@key,@value_name='Tcpport',@value=@PortNumber OUTPUT
SELECT CONVERT(char(20), SERVERPROPERTY('servername')) ServerName,
CONVERT(char(20), SERVERPROPERTY('InstanceName')) instancename,
CONVERT(char(20), SERVERPROPERTY('MachineName'))
as HOSTNAME, convert(varchar(10),@PortNumber) PortNumber
Which showed me that i don't have any instance name:
It seems not to be possible(or at least not easy) to change the InstanceName for the sql server, so i did not.
But i now tried the DSInit tool with parameter "/sqlinstance:" and this worked.(No InstanceName set)
This might be helpfull for some which have the same issue.