I know this question is pretty old, but VistaDB DOES support Isolated Storage and is XCopy deployable. We do not have a free version though, it is a commercial product.
Take a look at the SO post on Advantages of VistaDB for more information about other things we support.
Isolated storage support is much more than just not knowing your filename. You have to work with streams, you have to NOT require file level locking, you can't create temp files in the same path, you have to understand UAC and space limitations.
AFAIK VistaDB is the only embedded sql database to support Isolated Storage.