I have installed the free version of sql server 2008 (sql server management studio express edition) on my PC. After installation I get the following error
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I've read the error can be caused by UAC (on older versions of SQL Server Express). Try right-clicking on SQL Studio and running as administrator.
If that doesn't work there's supposedly a fix here for the same issue. Probably worth a try.
Script to add the current user to the SQL Server 'sysadmin' role