SCVMM cannot connect to SQL

I am in the setup of SCVMM and I have 2 options;

1   Install SQL Server 2005 Express Edition which tells me Setup has detected SQL instance MICROSOFT$VMM$ on the local server. (ID: 225)

2   Use a supported version of SQL instance which by default has the following entries;

     Server name   localhost

     SQL Instance  MICROSOFT$VMM$

     Database        VirtualManagerDB

     As I click Next the setup gets stuck for a couple of minutes then tells me Setup cannot connect to the specified SQL Server instance ( ID:339 ) Ensure that the server name and instance are correct etc...

What can I do to get SCVMM running again since it was but after promoting to DC did not worked again. Now I removed the DC and set as a member server but this issue is stopping me