That's a permissions error with the SQL database.  The user who is accessing the database doesn't have the correct permissions.  The reason for the error, is that the user gets authenticated (success), but SQL spits out an error DNN doesn't catch (undefined), however, it is still a return for the object, thus....Success.

I went round and round until I figured that out.  See if you long in directly to the SQL Server with the username you created and try to create a table in the database you created, chances are it won't let you and give you nice looking error...  That is the error that DNN sees as undefined.

Again, it's the permissions of the db user you are using