While trying to change something in my project, i got the following error.
"Failed to generate a user instance of SQL Server due to a failure in starting the process for the user instance. The connection will be closed."
The below solution that worked for me..
Delete all files inside the following folder
C:\Documents and Settings\ USER_NAME \Local Settings\Application Data\Microsoft\Microsoft SQL Server Data\SQLEXPRESS
[ Note: Remember to replace USERNAME with your username. ]
Re-Run the application, That's it.