database error when trying to install

We have been having all kind of problems trying to install wpmu.
This is our latest error and we cannot resolve it……..
“This either means that the username and password information in your wp-config.php file is incorrect or we can’t contact the database server at localhost. This could mean your host’s database server is down.”
We know our database server is localhost and I actually went in and made a new database to ensure our username and password information was correct and we still get this error.
Can anyone assist me with this? Any ideas?