> Will the following be not acceptable to the embedded server?
>
> "CREATE DATABASE 'localhost:C:/test.fdb' USER 'SYSDBA' PASSWORD
> 'masterkey' PAGE_SIZE 8192 DEFAULT CHARACTER SET WIN1252"

This does an TCP/IP connect to an server running on the same machine. It
gives an error is no server is running.

> "CREATE DATABASE 'C:/test.fdb' USER 'SYSDBA' PASSWORD 'masterkey'
> PAGE_SIZE 8192 DEFAULT CHARACTER SET WIN1252"

This might have an problem with the drive letter provided. I would
assume an TCP/IP connect to host "c" to be executed.

For embedded you should try ':c:\test.fdb'.

Elmar