With the release of Feb CTP, one of the known issues that's in this release is that setup might fail with a message that the server could not connect to the database.  It's listed in the known issues section of the CTP notes, but here is the error and workaround.

Error seen during setup:

"SQL Server Setup could not connect to the database service for server
configuration. The error was: [Microsoft][ODBC Driver Manager] Data source
name not found and no default driver specified"


  1. Run the "SQL Native Client" repair from the same install location as you
    ran the setup first time. For example:


  2. Run SQL Server setup again.