SMLatCST gave me a great idea!
The name of the database was prepopulated with the name of the old database which I deleted. Somehow, I believe that the new SEPM installation was trying to connect to a non-existant database.
I created an entirely NEW database and it now works!!!!!
Some notes:
1. Database was not on a compressed drive
2. This was a fresh install of SEPM
3. Database and SEPM are on two separate Virtual machines, both running Windows Server 2008
You guys are AWESOME!!!