WordPress installation with Xampp

I installed Xampp onto my F:/xampp.
I created my folder inside htdocs (folder)
I unzipped wordpress into my folder. F:/xampp/htdocs/folder/wordpress/.

I created my database at phpadmin (database)
I created user and set permissions to all (admin/X)

I open browser type in http://localhost/folder/wordpress/wp-admin/setup-config.php. I hit let’s go. I type in database name, user name, pw – that I just created in phpadmin. Database host -localhost.

I receive Error establishing a database connection. 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. Xampp is running. http://localhost/xampp/. Click on Status. Top 5 are activated. I’ve deleted user and recreated user so I know the user name and pw are correct.

I’ve tried manually entering the information from the wp-config-sample.php. Saving it as wp-config.php. Then going to http://localhost/folder/wordpress/wp-admin/install.php. I get the error:

Error establishign a database connection. 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.

Can someone please help me understand what I am doing wrong and how to correct it to get this working. I’m using Windows 7 64