After speaking to another member of the team, you could try one more thing: making sure that no other process (including Jubula) is currently accessing the embedded database. I'll try this out as well, but it will be later today. Perhaps you can already see if it helps you.
I have good news - the Test Executor is not broken.
In your case, the username is false. The username for the embedded database is sa.
In my case, I had entered the wrong password. The password for the embedded database is actually empty. When entering the password directly via the command line, it must be entered as "". However, in the config file (which I was using), it must be left empty (<dbpw></dbpw>).
So you should now be able to run your test when you change the username.