On Windows-based vCenter Server, installation fails if the Microsoft SQL Server database is using compatibility mode because of an unsupported version. Before installation of vCenter Server, you should ensure that the MSSQL version you are going to use is supported by VMware vCenter Server.
This error also can occur even if you are using a supported MSSQL version, but it is configuring to run in compatibility mode. It will raise the following error message:
The DB user entered does not have the required permissions needed to install and configure vCenter Server with the selected DB. Please correct the following error(s): %s. The error can be solved by using the supported database for vCenter.