VS 2010 new connection to SQL 2008 r2 problem

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SQL-Server

Visual-Studio

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System Info:
Windows 7(64), fresh install of both VS and SQL2008 r2.
VS2010 Ultimate SP1
SQLExpress is installed from download of SQLEXPRWT_x64
Have no Windows Updates showing for either
Have both instances of SQL and SQLExpress in SQL Config Manager
SQL config login is: both
have TCP enabled
SQL Browser Service is running

Symptoms:
So nothing I add new in SQL Management studio is visible from VS in the "new connection" dialog.

Connection Test succeeds for my Windows auth log on only. Meaning if I add a new SQL user in Management Studio, Connection Test fails for it as the log on.

Even using Windows auth log on, only "System Databases" are visible. Any database I create or restore in Management Studio is not visible to the VS "new connection" dialog in the "database name" field.

Oh, sorry, didn't ask a question. Googled all day but not found anyone reporting this specific problem other than one person that did not get a solution on that other forum.

This is my go to place for help, anyone have any ideas how to try and resolve this?