How To Add A New .mdf With ONLY Sql Authentication In SQL Express?

Hi all.

I am going around in circles all day on this.

I have a clean new install of win XP SP2, VS 2005 Pro RTM,
and a NAMED instance of Sql Express with mixed authentication mode specified at setup.
The sa pw is 123456

I would have liked just SQL authentication but no such option.

I am trying to add a new mdf file. If I just use the "Add New Item" in VS web app project it just adds a new .mdf file with windows authentication tied to the current profile I am logged in the os with. I am trying to avoid that as this projects is to be zipped and downloaded as a sample app. I am also trying to avoid embedding an instance of SSE as the recipients of the zip file already have SSE running iwth thei VS IDE.

So most logical is to create the file with SQL authentication.
I have to do it by the Add Connection GUI

and for data source: "Microsoft SQL Server Database File (SqlClient) "

for data file name: C:WebSitesWebsite1App_DataMyDatabase1.mdf (not yet existing file)

Use SQl server authentication:

user: sa, password: 123456 (the ones specified at set up of the SSE)

I keep getting

Login failed for user 'sa'. The user is not associated with a trusted SQL Server connection.

I keep getting the same error no matter what username I use or password, the current login, etc. It just does not let me use sql authentication.

Please help anyone. This is a nightmare.