While installing Sitecore Instance Manager (SIM) I made a silly mistake that gave me pause. I figured I would document it here in the hope it might help someone else might benefit.
The final step in the installation wizard attempts to do a permission check. It is labeled as "File Systems permission" and, indeed, it does check this and even provides a handy "Grant" button if SIM does not have the permission it thinks it needs.
What can be a bit confusing is that even after seeing the success message above you still encounter an error dialog complaining that "You probably don't have necessary permissions set. Please try to click 'Grant' button before you proceed."
What's happening? Under the hood, SIM isn't just checking the file system, it is also trying to create a test database in SQL. If the SQL login SIM uses doesn't have the right to create a database, then SIM will fail this "file system" check with (in this specific case) a misleading error. The fix is simple, make sure your SQL login has the dbcreator role or higher. Thus my silly mistake: Of course SIM needs the ability to create databases why didn't I think of that sooner....DUH! :)
Rerun the last step and enjoy the wonders of SIM!