Yes, you can use EventSentry with MSDE, however we do not recommend it as it provides limited administration capabilities and requires you to do many configuration changes through the registry.
When installing MSDE, make sure that you enable both SQL and Windows (mixed) authentication. If you have already installed MSDE and need to turn on mixed authentication then please see the topic "Turn on Mixed Mode Authentication after you install MSDE" in the first link "MSDE security and authentication" below.
Please note that MSDE has a maximum database size of 2Gb and only allows up to 25 concurrent connections, which might not be sufficient for your database consolidation needs.