Database Management Tool (DMT) uses a "SQLBrowser" service to find all local MS SQL Servers you have installed. By default after MS SQL 2012 Express is installed this service is stopped and you should start it manually.
You could start the SQLBrowser service following these steps:
1) Start Windows Task Managed
2) Go to Services tab
3) Find "SQLBrowser"
4) Start the services
If you don't want to start the service, you could type the name of the server in the combo box and when you leave the combo box DMT will create a connection with the server.
Hope that helps.
the Telerik team