With Windows Azure SDK 1.7, Windows Azure Storage Emulator uses LocalDB instance specific configuration at following location:

C:\Users\<yourloginname>\AppData\Local\DevelopmentStorage\DevelopmentStorage.201206.config

The Configd XML is as below:

 

<?xml version="1.0"?>
<DevelopmentStorage xmlns:xsd="http://www.w3.org/2001/XMLSchema" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" version="2009-03-18">
<SQLInstance>(localdb)\v11.0</SQLInstance>
<PageBlobRoot>C:\Users\avkashc\AppData\Local\DevelopmentStorage\PageBlobRoot</PageBlobRoot>
<BlockBlobRoot>C:\Users\avkashc\AppData\Local\DevelopmentStorage\BlockBlobRoot</BlockBlobRoot>
<LogPath>C:\Users\avkashc\AppData\Local\DevelopmentStorage\Logs</LogPath>
<LoggingEnabled>false</LoggingEnabled>
</DevelopmentStorage>

And based above you can see that “v11.0” LocalDB instance is Windows Azure Storage Emulator specific. When DSInit starts first time it creates the v11.0 database in LocalDB. You can verify it as below:

c:\>sqllocaldb i
v11.0

If you want to choose Local SQL Express DB instead of LocalDB, you would need to change the <SQLInstance>**</SQLInstance> property to add proper Database name.

After that you would need to call DSInit (http://msdn.microsoft.com/en-us/library/windowsazure/gg433005.aspx) as below to reconfigure to Local Storage Database:

> DSInit [/sqlinstance:<DatabaseInstanceName> | /server:<Machine name> | /autodetect] [/silent] [/forcecreate]