SQL Prompt usually connects to a server only when you request a database from that server. If you downloaded and installed Visual Studio 2010, then it usually installs an instance of SQL Server Express. So when you say you installed the SQL Server from Visual Studio, that tells me that you are probably using SQL Express.
At any rate, the error message implies that you did connect to the server, just the sysdatabases view seems to be missing. As this is part of the information schema of SQL Server, it would be really odd if this view did not exist in the master database schema. You may not have the right permissions to open the master database.