Are you using Windows authentication or SQL authentication for your SQL instance?
Can you post here the connection strings as they are in the web.config file?
What file version you used to install DNN, install or starter kit?
Do you have IIS installed?
What I'll try to do is to replicate your enviroment and error, then fix it up. For what I've heard, your problem is related with permissions of the ASPNET user, SQL user, SQL Server authentication... we will see...
Rgds,