On the database selection step of the database server installation, the Error 27502: 'Cannot Connect to Server,' is received.
There are a couple possible solutions to this error:
If local does not appear in the drop down by default, manually enter the computer name for the server instead of 'local'.
Ensure Windows and SQL Authentication is enabled in SQL and the logged in Windows user has both local and domain administrative permissions. If the Windows user does not have permission, SQL authentication using the sa account may be needed.