When creating a Full Package using P&D and you have an SQL Service instance referenced in the solution, the Service Instance is also added to the package which is not a problem.
When trying to deploy this solution you will then need to remap the Service instance, to the Service instance that exists on the target. This is not working as expected and doesn't allow you to map.
This is a product bug and is expected to be fixed in K2 Cloud Update 6 Q4.
Please use one of these workarounds:
1. Full package - When packaging, right-click the SQL Service Object and package it by Reference.
2. Make use of the Package by Reference option when creating the package. (Be aware that if the solution spans over multiple categories / Lists, P&D will not refactor out of context items. This means Artifacts on the non-target list will be duplicated. One with a Long system name which is the correct one and one with a short system name which is the one not refactored).
3. On deployment, ensure you map the SQL Service SmartObjects to the corresponding SmartObjects on the target. Make sure you uncheck the Service Object to exclude it from the deployment.