I got it...but without the localDB.
What I did was I went and modified hsqldb-ds.xml
Comment out the following lines
<connection-url>jdbc:hsqldb:hsql://localhost:1701</connection-url>
and
<connection-url>jdbc:hsqldb:${jboss.server.data.dir}/hypersonic/localDB</connection-url>
and uncomment
<connection-url>jdbc:hsqldb:.</connection-url>
It doesn't save though...but I got it to work for testing / tutorials etc.
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