"Connection to SQL server files require SQL Server 2005" error in Visual Studio 2008

I am very much new to the .net framework and Visual Studio. When i try to add a SQL Server database to my project using solution explorer App_data -> Add new item i get the following error message:

Connection to sql server files(.*mdf) require sql server 2005 to function properly.   

I have reinstalled SQL Server 2005 succesfully but still the problem remains the same. Please help.