It is likely that you are running into a conflict with password hashing. If you’re using MySQL 5, it employs a password hashing algorithm completely different from previous versions. To find out if this is the problem, open wp-includes/wp-db.php. On line 43, you will see this text:
$this->dbh = @mysql_connect($dbhost, $dbuser, $dbpassword);
Take out the “@” as this supresses errors and retry the installation. If you are experiencing the password hashing issue, you will see the following warning:
Warning: mysql_connect(): Client does not support authentication protocol requested by server; consider upgrading MySQL client in …
If so, then you’ve found the problem. Go ahead and add the “@” back into line 43 and follow the MySQL instructions for fixing this problem. They are located here:
https://dev.mysql.com/doc/refman/5.0/en/old-client.html
Hope this helps.