Did you notice that, though it says in the document that any name can be used for the new databases, in the Known Issues section at the end, it says that the names cannot start with a number or a symbol? 

Yes, I noticed that. Actually, I followed the instructions, and even the names of databases are the same.

Have you worked through all of the other troubleshooting issues in that Appendix?  It is a long list.  That's all I've got.  This product update is still too new for us to know more about troubleshooting it.  And third party developers are not likely to be able to help much, either, since Sage just sprang this on them without warning, I am told.  Try calling Sage tech support. 

Thanks for the hint. I have solved the issue by deleting the automatically created ODBC with the name of the server and creating a new one manually using the SQL Server Native Client 11.0 driver.

You're supposed to set the encryption to optional on the ODBC 18.  That should be in the instructions.

Sage 300 2023 does not support SQL Server Native Client 11.0 driver. That is why it installs the ODBC Driver 18 and this must be used. On the fourth window of Microsoft SQL Server DSN Configuration and under Connection Encryption, check the "Trust server certificate" box.

Actually, Native Client 11 works fine on 2023.

I thought this was a fine workaround too until I had a client that had a really slow sage 2023.  Early on we hade used the client 11 when we didnt know about the trusted connection.  But I just flipped this client from native client 11 to 18 and the speed was very noticeable!  

I battled with this error too (as well as a shortened message). In the end, when creating the Store and Vault DB's, I changed the collation to Latin1_General_CI_AS (from Latin1_General_BIN, my default). It all worked after that.

Just a general hint I wanted to add - we're ticking on Trust Server Certificate in the ODBC 18 driver instead of setting Connection Encryption = Optional which is just as easy and sites can keep their connections secured with encrypted traffic, albeit with an auto-generated certificate instead of a proper one.