I have face this error in SAP b1 10.0 PL02 Sql server 2016.
In sql server 2016 you will find sql server and sql server management studio separately & installation will be done separately.
Please follow this :-
To avoid this error please install SQL server and SQL server management studio on same location you won’t face any error like this.
Still if you are facing this error please do the following
a > Uninstall SAP completely.
b > Uninstall Sql server management studio only.
c > Restart the system and reinstall Sql server management studio .
d> Then install SAP b1. And try this will work.