“CREATE DATABASE permission denied in database 'master'”
IIS runs under the Network Service account, which does not have permissions to create a new SQL Server Express database by default. You can comment out the <Sites> section in the ServiceDefinition.csdef file to indicate that your web role should run in the Hosted Web Core, which runs under your authenticated user account, rather than running in IIS, which runs under the Network Service account. We will revert this change later, before deploying to Windows Azure, but for now, make theServiceDefinition.csdef file look like the following:
<Binding name="Endpoint1" endpointName="Endpoint1" />
<InputEndpoint name="Endpoint1" protocol="http" port="80"/>
<Import moduleName="Diagnostics" />
Now you run your Windows Azure MVC 3 Application which will work….