I would suggest using a localDB in SqlExpress.
Microsoft® SQL Server® 2012 Express is a powerful and reliable free
data management system that delivers a rich and reliable data store
for lightweight Web Sites and desktop applications.
http://blogs.msdn.com/b/sqlexpress/archive/2011/07/12/introducing-localdb-a-better-sql-express.aspx
http://technet.microsoft.com/en-us/library/hh510202.aspx
You could also look at this similar question.
Here as an article on XML vs. DB which shows XML is losing ground.