The readme.txt shows how to leverage the cloud Azure service which works and is terrific. Sometimes you would prefer to use local storage (maybe you are on an airplane or you just don't want to ding your Azure account with silly dev activities)
First thing you need to do is to download the Azure SDK (http://www.microsoft.com/windowsazure/sdk/)
Next, Initialize the storage.The first time you run the storage emulator, you use the
DSInit Command-Line Tool to configure the environment. The initialization process creates a database in SQL Server Express and reserves HTTP ports for each local storage service. This step
requires administrative privileges. The tool displays a message indicating that the initialization process has finished.
Third, Start the Windows Azure Storage Emulator 1.Click Start, point to All Programs, and then click Windows Azure SDK. 2.Click Storage Emulator
Lastly, modify app.config under <connectionStrings> to use the local developmeng storage instead of Windows Azure in the Cloud
<add name="Storage" connectionString="UseDevelopmentStorage=true" />