Q: "did you use attached or user instance database"
I definitely did not use the Attach command when setting up a database for the DNN instance.
If by "User instance" you mean, SQL Server authentication (i.e. password required), then the answer is Yes.
Question: If sufficient testing is performed do you think v7.4.0 could be trusted to run a productive website or would it be wise to wait for the stabilization release v7.4.1?
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Here is some related information that might be of value to you and others in thinking about the cause/effect of the reported problem.
The DNN instance in question is not a child of localhost (the IIS default website) - it is a parent-portal with its own IIS application pool.
Once the DNN instance appeared to be running correctly I installed the DNNBackup module to a new page (called Backup) in the Host\Advanced Settings area. I then used DNNBackup in an attempt to create a native-backup of the database, but instead I got the following error message,
"Cannot open backup device 'C:\inetpub\wwwroot\DNN7.4.local\httpdocs\backup\DNN7.4.local_Database.2015.03.27.223456_Native.bak'. Operating system error 5(Access is denied.).
BACKUP DATABASE is terminating abnormally."
To fix this problem I had to give the Principal MSSQL$SQLEXPRESS full control to the “backup” folder in the DNN file system.
Daniel