Visual Studio popped up to tell me to install SQL 2005 Express, well I have SQL 2008 Express installed. Indeed the error link redirects to 2008.
I finally found out its because I installed SQL server as the default rather than the expected SQLEXPRESS instance.
To fix this I went into tools->options selected Database tools, data connections and removed the instance name from SQL Server instance name.
If you have no idea what the instance is called you can use the SQL server installation centre, choose tools then Installed SQL Server features discovery report. This will list all the instances of SQL and features installed on your computer.
