I'm not sure that SQL Express will work with VC 2.0.x.
Use VC 2.5.x instead.
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What I have found out:
VC 2.02 comes with a built in MSDE that generally works well if your host Server count is low ( mine is 5 ), with 30 VM's.
For the specific error that I have ( basically corrupt SQL database ) there is no fix per say due to the limited tools for MSDE.
Microsoft SQL Server 2000 Desktop Engine = "MSDE" which VMware uses "built in" with Virtual Center when you select that option.
So the "easy" fix was to use another physical server and install VC from scratch, again using the built in MSDE.
Then using the Vclient to access the "new" VC and its database, I populated by adding the 5-host servers. The VM's automatically appeared since all this info is stored on the hosts. The only thing I had to add was a Template.
It was so easy ( for a low count of hosts ) that I was making this so much harder looking for a database fix tool.