Nav 5 - SQL Server Express - Database login fails

I am trying to set up a Nav 5 demo on a laptop with Win XP Prof 2002 SP2 using SQL Server Express [I need to ultimately start doing some SQL Reporting Services stuff as well]

It opens Nav 5 fine assuming my laptop ID but I cannot set up a Windows login since there is no Active Dir. When I set up a database login user with SUPER rights and synchronize, all goes well until I try to start Nav 5 as that user. I then receive a "18452 ... - login failed. The user is not associated with a trusted SQL server."

I have set up the same named user within SQL Express as a dbo and checked the Access property on Alter Database->Options tab for dbos, dbcreators & sysadmin.

I admit to being a novice on SQL setup so if I have not provided enough info please let me know; appreciate in advance any and all advice on this. Thanks.