Since this is windows and your mysql connection is defined outside - how do you 
connect to the DB - over TCP/IP or over Named Pipes?
I *think* that if you switch file system config back to FS instead of storing 
it in DB you should be able to install fine.
Alternatively you can also revert your config to the older 
single-connection-per-workspace PM mamangers.
Either that or you will need to pimp up your mysql installation/configuration.

HTH,
Jan

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Context is everything: 
http://forum.magnolia-cms.com/forum/thread.html?threadId=a7fec09e-9321-4cbd-a2a5-1b7d57e0e4a7


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