Are you sure you have enough privileges to create the _MSG database on the destination SQL? Have you tried that manually?
I you have an old install of SynchService or if you install it without configuring you will have a SQL script you can test (C:\Program Files (x86)\Microsoft Dynamics AX\60\Commerce Data Exchange\Synch Service\data\AXRETAILMSG.SQL) - see if you can run that through MgmtStudio.
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Yes I am logged in as Administrator and moreover, I have tried to create a database from sql mng studio and then later assign this to Sync services duting installation. But it didn't work. I have also installed Sync services without configuring them from the setup, but when I want to start the service through its settings it again fails to validate database.
From service setting if I gave name of new database it gives error that it failed to execute the generation of database script
and if I gave a name of an existing database it says error happend while validating database.
I installed it without configuring and have run sql script frm mnagt studio that you have address on a manually created database, it gives following error
Msg 102, Level 15, State 1, Line 4
Incorrect syntax near '%'.
Msg 102, Level 15, State 1, Line 2
Incorrect syntax near '%'.
Msg 102, Level 15, State 1, Line 8
Incorrect syntax near '%'.
Msg 1718, Level 16, State 1, Line 3
Change tracking must be enabled on database 'Commerce Data Exchange' before it can be enabled on table 'IncomingMessages'.
Msg 2714, Level 16, State 6, Line 2
There is already an object named 'SCMonitoringConfig' in the database.
Msg 22105, Level 16, State 1, Procedure GetDeltaMessages, Line 16
Change tracking is not enabled on table 'IncomingMessages'.
Msg 22105, Level 16, State 1, Procedure GetDeltaMessagesErrOnly, Line 16
Change tracking is not enabled on table 'IncomingMessages'.
Msg 15151, Level 16, State 1, Line 4
Cannot find the object 'GetDeltaMessages', because it does not exist or you do not have permission.
Msg 15151, Level 16, State 1, Line 5
Cannot find the object 'GetDeltaMessagesErrOnly', because it does not exist or you do not have permission.