How to use sqlcmd to create a database

Use @Jeremiah Peschka's answer to supply the sqlcmd utility with the script to execute.

As for the location for the newly created database, it can be specified as part of the CREATE DATABASE command:

CREATE DATABASE dbName
ON (
  NAME = dbName_dat,
  FILENAME = 'D:\path\to\dbName.mdf'
)
LOG ON (
  NAME = dbName_log,
  FILENAME = 'D:\path\to\dbName.ldf'
)

As you can see from the linked article, you can specify other properties as well, like initial size, maximum size etc.

This is very simple. Just enter following command to run sqlcmd:
sqlcmd -U sa -P password
Then enter:

CREATE DATABASE MYDB
GO

This will create the db. Then enter "quit" to exit.