CREATE DATABASE Permission denied in database 'master' error
If you can run the code you posted successfully in the context of your domain account then it's likely the tool is connecting to your database as a different user.  Are you able to inspect the connection string it uses?  If so, check to see if it's using Integrated Authentication or is using a User ID/Password combination and modifying things accordingly there.  Either change the connection string to use Integrated Authentication or the SQL login that you created as a test.