If you are getting a “failed to create database” error message after installing Mediaportal ver. 1.0.x then there is a chance that you have actually upgraded your MP installation and the database that MP is trying to create already exists.
To fix: go to X:/Program files/Microsoft SQL Server\MSSQL.1\MSSQL\Data and check if the Mediaportal database is already there. If it is, then uninstall MSSQL, wipe Data directory manually and reinstall Mediaportal.