SQLDm fails to install with error 1603 (sql server 2016 sp1)

Hi, I tried several times on different servers installing SQLDm but it fails every time.

In the file 'InstallSQLDM' I have the following entry:

 

MSI (s) (C8:10) [13:27:13:332]: Executing op: CustomActionSchedule(Action=ISSQLServerInstall,ActionType=1025,Source=BinaryData,Target=ISSQLServerInstall,CustomActionData=C:\Users\ADMINI~1.ANU\AppData\Local\Temp\~A314.tmp)
MSI (s) (C8:F0) [13:27:13:334]: Invoking remote custom action. DLL: C:\Windows\Installer\MSIABA4.tmp, Entrypoint: ISSQLServerInstall
1: Processing the SQL connection 'SQLdm'...
1: Determining if there is at least one SQL script scheduled to execute under the connection...
1: The SQL script 'SQLdmDatabaseInstall.sql' is scheduled to execute. Note that the final decision will be made later if you have a schema version specified for this script. Script Execution=RunOnInstall, Action=Install, Component State=Install, Schema=
1: Attempting to establish the SQL connection... Server: INMESPSQL06\DEV, Database:
1: Attempting to execute SQL scripts...
1: Determining if the SQL script 'SQLdmDatabaseInstall.sql' will be executed...
1: The SQL script will be executed because no schema version is found on the target database.
1: Prepare executing SQL script file: 'SQLdmDatabaseInstall.sql'. Path: 'C:\Users\ADMINI~1.ANU\AppData\Local\Temp\~A315.tmp'
1: Executing SQL at Line 29 >>>
1: Changed database context to 'master'.
1: Executing SQL at Line 32 >>>
1: Changed language setting to us_english.
1: Executing SQL at Line 61 >>>
1: Executing SQL at Line 69 >>>
1: Setting recovery mode
1: Executing SQL at Line 73 >>>
1: Changed database context to 'SQLdmRepository'.
1: Executing SQL at Line 79 >>>
1: Executing SQL at Line 103 >>>
1: ADO Error: Number: -2147217900 Description: SELECT failed because the following SET options have incorrect settings: 'ANSI_WARNINGS'. Verify that SET options are correct for use with indexed views and/or indexes on computed columns and/or filtered indexes and/or query notifications and/or XML data type methods and/or spatial index operations. Source: Microsoft OLE DB Provider for SQL Server SQL State: 42000 Native Error: 1934
1: There was a SQL scripting error at line 103. Aborting the setup.
MSI (s) (C8!2C) [13:27:13:748]: Product: IDERA SQL Diagnostic Manager (x64) -- Error 27506.Error executing SQL script SQLdmDatabaseInstall.sql. Line 103. SELECT failed because the following SET options have incorrect settings: 'ANSI_WARNINGS'. Verify that SET options are correct for use with indexed views and/or indexes on computed columns and/or filtered indexes and/or query notifications and/or XML data type methods and/or spatial index operations. (1934)

Error 27506.Error executing SQL script SQLdmDatabaseInstall.sql. Line 103. SELECT failed because the following SET options have incorrect settings: 'ANSI_WARNINGS'. Verify that SET options are correct for use with indexed views and/or indexes on computed columns and/or filtered indexes and/or query notifications and/or XML data type methods and/or spatial index operations. (1934)
CustomAction ISSQLServerInstall returned actual error code 1603 (note this may not be 100% accurate if translation happened inside sandbox)

 

As a workaround I tried changing the ANSI_WARNING setting on the repository database but this had no effect. The same error message appeared. Unfortunately I can also not run the script manually, since it disappears from the temp directory.

Any help would be greatly apreciated.