When you installed SnapManager for SQL, you had to specify a service account. That service account needs to be added to SQL Server 2008 with the sysadmin role. In previous versions of SQL Server, it was enough that the account was in the local Administrators group, but this is no longer the case.
Note that this can be confusing when running SMSQL the first time because it asks you how to login and you probably told it to use the Windows Credentials of the current login user. Therefore, you're probably suspecting this account is having permissions problems, when actually it is the service account that is having problems. In fact, if you run a SQL trace on your server and specify to monitor for Login Failures, you'll see the login failure of this account.
Do you have more than one instance of SQL Server installed? Does the service account have sysadmin on all instances?
I ran into the same problem configuring SnapManager for Sharepoint. I installed a fresh SQL Server and configured SMSQL and handed over to app admin, who installed a SQL Express with the Sharepoint installation. Since my service account didn't have access to this instance, I couldn't run the SMSQL config wizard (gave me the same error). It took me a while figuring it out! Uninstalled the Express installation and voilá!