Answer 1
This is a limitation of the Express editions of Visual Studio. They offer very limited designer support for databases. For example, you can't connect to a standard SQL Server database using the Visual Studio designers using an Express edition,
only a "user instance" database.
You can still work with MySQL databases via code using the .NET Framework.
While I'm guessing this isn't the answer you were hoping for, I hope that knowing that you're running into a limitation of the Express edition helps save you some time searching around for the cause of the behavior.