We've been investigating alternatives to MSDE for a recent project. Firebird was one of the alternatives we investigated. Today I saw in a blog post another possibility that we will consider: VistaDB for .NET
VistaDB 2.1 database for .NET has been released
This 2.1 update includes over 60 improvements, including new support for .NET 2.0 and Visual Studio 2005. VistaDB is a small-footprint, embedded SQL database alternative to Jet/Access, MSDE and SQL Server Express 2005 that enables developers to build .NET 1.1 and .NET 2.0 applications. Features SQL-92 support, small 500KB embedded footprint, free 2-User VistaDB Server for remote TCP/IP data access, royalty free distribution for both embedded and server, Copy 'n Go! deployment, managed ADO.NET Provider, data management and data migration tools. Free trial is available for download.
It looks pretty good: Faster than Access or MSDE, XCOPY deployment, ADO.NET Data Provider, etc, etc. We'll have to check it out. Apparently VistaDB does not support stored procedures, but their upcoming 3.0 release will offer "Stored Code", a way to embed C# code in at the DB layer. Sounds interesting.
I'll post more details after we get to play with it.