Ok, here are the exact steps I followed:
PM> update-database -script
Applying explicit migrations: [201501282207413_Initial].
Applying explicit migration: 201501282207413_Initial.
System.Runtime.InteropServices.COMException (0x8004000C): User canceled out of save dialog (Exception from HRESULT: 0x8004000C (OLE_E_PROMPTSAVECANCELLED))
Server stack trace:
at EnvDTE.ItemOperations.OpenFile(String FileName, String ViewKind)
at System.Data.Entity.Migrations.Utilities.DomainDispatcher.OpenFile(String fileName)
at System.Runtime.Remoting.Messaging.StackBuilderSink._PrivateProcessMessage(IntPtr md, Object[] args, Object server, Object[]& outArgs)
at System.Runtime.Remoting.Messaging.StackBuilderSink.SyncProcessMessage(IMessage msg)
Exception rethrown at [0]:
at System.Runtime.Remoting.Proxies.RealProxy.HandleReturnMessage(IMessage reqMsg, IMessage retMsg)
at System.Runtime.Remoting.Proxies.RealProxy.PrivateInvoke(MessageData& msgData, Int32 type)
at System.Data.Entity.Migrations.Utilities.DomainDispatcher.OpenFile(String fileName)
at System.Data.Entity.Migrations.Extensions.ProjectExtensions.NewSqlFile(Project project, String contents)
at System.Data.Entity.Migrations.UpdateDatabaseCommand.<>c__DisplayClass2.<.ctor>b__0()
at System.Data.Entity.Migrations.MigrationsDomainCommand.Execute(Action command)
User canceled out of save dialog (Exception from HRESULT: 0x8004000C (OLE_E_PROMPTSAVECANCELLED))
In visual studio, going to SQL menu, Transact-SQL Editor, New Query... It gives you a dialog about the tools not working with the server installed. Installing SQL Server Data Tools - December 2012 update (http://msdn.microsoft.com/en-us/jj650015) fixed the problem.
The dialog should provide you a link to the SQL Server Data Tools.
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