Hey Jason -
Well, regardless of what has happened on previous setups, this setup isn't using the settings.php that you previously attached... that settings file has a password in the mysql setup, and the error message you are getting indicates that no password is being used to connect to mysql. Hence, a different settings.php file is being used somehow.
I'd look at the drupal/sites directory closely to see if there is something there that is pulling from a different settings file.
Cheers, --Katin
I have had no problems on several setups using the default of:
sites/default/settings.php
-- Jason Flatt http://www.oadae.net/ jason@oadae.net -- [ Drupal support list | http://lists.drupal.org/ ]