Hi,
I'm going to guess that you are using SQL Express that is shipped which will not include the client you require.
Please download the information from below. You will also need the SQL Server Native Client
You need to download:
Microsoft SQL Server Native Client
Microsoft SQL Server 2005 Command Line Query Utility
Once you have the client installed you should be able to setup the database and the error should go away.
You can also look at this link
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If you found this helpful then please leave some points.
I'm getting this same error when installing VC4.1 onto W2K8R2. I installed those two packages and the problem is still there. Any other ideas?