If you're installing the Free Edition of SysAid, it will try to install MS SQL Express 2008 R2 by default. The problem it runs into is if MS SQL Express 2008 R2 is already installed on the server, you'll receive the error message and the installer will quit. Because the Free Edition installer is tightly integrated with the SQL installation, we don't have a way (yet) to install them separately. Our recommendation has been to uninstall SQL Server Express 2008 R2 to allow SysAid to install correctly, however you also want to check and make sure the SQL server isn't being used for any other applications. Also, some Windows Server, such as Windows SBS, has SQL Express 2008 R2 installed by default.
If you're installing the basic or full editions, then select to customize the settings and you'll be prompted as to where to install the database. From there, you can install the database on the existing SQL database server.
Are you able to uninstall SQL Server Express or use a different server?