Hi,
Consider creating an SQL Compact Edition database, which will store the database in a file but allow standard database access through an API like the entity framework. See this article:
http://technet.microsoft.com/en-us/library/cc835495.aspx[
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This way a SQL CE database is distributed with your application.
Use the Entity Framework to create a model (i.e. the table structure) and create the database from this. You can then use the classes created to add data to your database or query data from it.