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C:\>osql –E –S localhost\CRM
1> drop database mscrm_msde
2> go
1> quit
I cannot connect to the SQL Server on the local machine using this command.
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i.e. without the localhost
If that doesn't work, try uninstalling Microsoft DYnamics CRM for OUtlook whilst logged in as the user that it was configured for.
You might have to temporarily make that user a member of Local Administrators.