Is the ALTER LOGIN command availble in this instance?
If you are getting the "Incorrect Syntax" error, You may want to double check the instance you are running the ALTER LOGIN command against. It is not available in Sql Server 2000.
If I am using the sqlcmd, how do I ensure I am using the correct instance?
Typing sqlcmd -? at the command prompt will list all the options/switches.
You can specify a server to connect to using the -S switch (-S servername).
I will suggest that you check with other users in the group to see if they are having similar problems before you change the default database.