Ravi,
Having SAS installed makes a difference. In that case, EG would use SAS to read the local data -- if SAS is registered properly, which perhaps it is not.
To make sure, go to a command prompt window. CD to the directory where SAS is installed (ex: "C:\program files\sas institute\sas") and run this command:
sas /regserver
Then try your test in Enterprise Guide again.
Another thing to check: in Enterprise Guide, choose Help->About, then click System Information. That window will tell you what version of SAS that Enterprise Guide thinks is installed and registered on your machine.
Chris