By default when you install SQL Express, if you choose NT authentication, it will be installed in NT auth mode only. You'll need to set it to Mixed mode. See solution 3 in this kb article.
I have expressed myself unclearly: it is during the ePO 4.5 installation that we select SQL Express installation and also select SQL authentication in the wizard. So practically no previous SQL database exists on the server, ePO should be creating it based on data we enter.
Ah, sorry, I misunderstood.
Presumably the SQL Express instance has been installed by the time the error is generated - can you connect to it via OSQL or Management Studio Express using the sa account? If you check the registry is it definitely set to mixed mode?
interestingly or should I say accidentally (refer to: Murphy's Law), I failed to install SQL Management Studio on this server and with the available tools already installed I cannot answer your questions. However I have consulted with our SQL guy and he said that by default Windows authentication is enabled on the database. Then if you were member of the local admin group, you would be able to set it to mixed mode, when you can set builtin SQL users or generate new ones.
I was under the impression that it is vice versa (i.e. mixed mode is when you enable Windows authentication too) and when ePO installer asks for autentication, I can enter sa password what I want because the installer sets then in the database.
With Windows authentication selected, I could inish ePo installation properly.
Thank you for your help and suggestions.