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AX2012 R3 Demo data: Failed to create a session; confirm that the user has the proper privileges to log on to Microsoft Dynamics.

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Same error, same cause, slightly different solution.
When setting up a machine with the demo data given by Microsoft, you may encounter this error when synchronizing database.
The cause of this issue is that in the demo data there are three partitions, and there is no "admin" USERINFO records for "ps" and "ext" partitions. Since there is no existing USERINFO records for "ps" and "ext" partitions, I created two dummy user (just give them a userId and save. Don't enable them). Then go to SSMS and run:

UPDATE USERINFO
SET ID = 'Admin', Name = '[name]', Enable = 1, SID = '[sid]',NETWORKDOMAIN = '[domain]', NETWORKALIAS = '[alias]',PARTITION = [recid for 'ps' partition record]
WHERE ID = 'temp1' 

Repeat the above for 'ext' partition. Then the problem is solved.

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