By default Test Data Manager uses a Sqlite backing database. If you want to use a SQL Server backing database instead:

• Make sure you have a running SQL Server instance that the computer running Test Data Manager can connect to and you know the ADO.Net connection string for it.
• Find the config.yml config file in the installation folder (typically C:\Program Files\Red Gate\Test Data Manager on Windows).
• Edit the line saying TdmDatabaseEngine: Sqlite  to say TdmDatabaseEngine: SqlServer.
• Edit the line below defining the ConnectionString to use an ADO.NET connection string to your SQL Server instance.
• From the Start menu, open the 'Services' app and use it to restart the service called 'Redgate TDM Service' to apply the changes.