Failed to generate a user instance of SQL Server...

I wanted to upgrade SQL Express upto SQL Express Adv with Reporting services to see how it works.

I deinstalled SQL EXPRESS Server and installed new SQL Express Advanced with Reporting Services checked. After this step VS C# Express cannot open old Data connections and cannot create a new one. The error message is:

"Failed to generate a user instance of SQL Server due to a failure in starting the process for the user instance. The connection will be closed."

The error is related only to MDF's. MDB's are opened without errors. I tested that I can attach/detach the databases and use the normally in SQLEXPRESS server - all was working properly.

I deinstalled both: SQL Express Advanced and VS C# Express. I installed VS C# Express again but without SQL Express. In next step I installed SQL Express Advanced again but Reporting Services were unchecked.

This time C# Express opened old data connections and created a new one without errors. So, I updated the SQL Express installation and included Reporting Services. After this step VS C# Express showed the connection errors again.

I "googled" if someone else noticed this error message but nothing found.

Can anyone see what I am doing wrong here I am certain it is my fault
but I can't see where.

Any useful tips would be greatly appreciated.

Thanks,

Marek