With Entity Framework (database-first model), you don't add a reference to a database project, but instead to an actual database. In your WPF project (or a separate library), Add New Item, and select ADO.NET Entity Data Model.
From there, it will walk you through the steps of choosing the database to build your data model from, along with which objects you want to bring in.
But before you do that, you have to publish the database somewhere, to a real SQL server (can be your local dev machine, and can be SQLEXPRESS or possibly localdb). Then when you add the EF model, you'll have a connection to point to.
Once your Entity Framework model is up and running, you shouldn't have to write any SQL (assuming you're just doing relatively simple CRUD operations).