Install.php error

I see so many are having this issue, yet I don’t see much support for it. I am doing a fresh install of wp 2.6 on my server. I get this error that so many are getting:

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.

I double checked all usernames, pw, etc. All are correct. I have another wp blog in a different directory on the same server and the settings match. What can I do? Any help appreciated