Installation Database Error

Step two in the installation process breaks and I see a ton of databse errors on the resulting step two page. Errors such as:

WordPress database error: [select command denied to user: ‘thellum@localhost’ for table ‘wp_categories’]
SHOW INDEX FROM wp_categories;

and

WordPress database error: [alter command denied to user: ‘thellum@localhost’ for table ‘wp_categories’]
ALTER TABLE wp_categories ADD COLUMN cat_ID bigint(20) NOT NULL auto_increment

Anyone have any ideas? It seems like a permissions error on the folder structure at the hosting server. Could this be the case? Any help much appreciated.