The person installing has to have rights to create databases, and be the DBO on this DB of course, since this is the account that will be used moving forward for everything in the application. Also be sure you're logged on as that "person" or account, at least for the installation.
Outside of that, I've not seen this.
Though... there is one other possibility. The SIM's PL is updated on a regular basis as patches and such are released. At times, a PL is released that is... incorrect. It is possible that you simply need to try again another day and the problem will be gone. This kind of error generally points to something code related, not security related, and so my FIRST guess as a troubleshooter would be something outside your control.
OH, and do look for odd characters in account names and passwords. They can really mess up scripts that may interpret the characters as code instead of names.