When trying to connect to Local Storage nothing happens. The little plug, showing that it is trying to connect, appears for a split second and then goes away. This happens when double clicking on Local Storage Connection and when right clicking on it and selecting Connect. It is not possible to connect to local storage.
RESOLUTION #1:
1) Find the Connections.xml file, located in the C:\Users\<username>\AppData\Roaming\Quest Software\Toad Data Point x.x folder, where x.x is the version number.
2) Optional: Make a copy of the Connections.xml file, as a backup, in case something happens while modifying it and you need to revert back to the original.
3) Right click on the Connections.xml file and select to open with Notepad.
4) In the Local Storage section of the Connections.xml file, delete everything inbetween the <Connections> and </Connections> tags. Do not remove the <Connections> tags, just what is in between. The <Connections> tag should be on the sixth line, so you should start deleting on the seventh line. The lines being deleted should look like...
<Connection type="Local Storage" autoCommit="True">
<Name>Local Storage Connection</Name>
<Path>Local Storage</Path>
<AutoConnect>False</AutoConnect>
<Database>
</Database>
<Host>localhost</Host>
<User>root</User>
<WinAuth>False</WinAuth>
<LastConnectionDate>2014-04-02T22:44:10.7094478</LastConnectionDate>
<Options>
<Protocol type="Internal" port="12345" serverport="54321" />
</Options>
<Notification>False</Notification>
</Connection>
RESOLUTION #2:
Reboot the machine.