Hello Philip,
User doesn't have proper authorization to
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CREATE FILE encountered operating system error 5(Access is denied.) while attempting to open or create the physical file 'F:\NSMDATA1\NSMDATA1.mdf'. (.Net SqlClient Data Provider)
Make shure if user has write right to F:\NSMDATA1 and to NSMDATA.mdf.
Also check http://www.guyellisrocks.com/2010/07/create-file-encountered-operating.html
BR,
K.