You should create a separate sqlDatabase element in your Component xml definition, something like:
<sql:sqldatabase id="masterId" database="master" server="[SQLSERVERNAME]" xmlns:sql="#unknown" />
This is in case of Windows authentication. For SQL auth you need to add User element to SqlDatabase element. Then in your SqlString reference your masterId
<sql:sqlstring id="Attachdb" executeoninstall="yes" sqldb="masterId" xmlns:sql="#unknown" />