Two LMDBs is not an easy task to handle, and SP05 while releasing a numerous amount of features also released a large amount of issues (I suggest SP08, as SP10 is going to be released towards the end of this year).
The easiest solution for you, would be to install a second SMD agent (use a different SID and instance #) and the host agent will remain the same. Save yourself some time!!
Also what is the desire to keep the SLD central on the Dev system?