If I was the only person with this issue, I would not suggest you fix it. But a LOT of people are having this problem, going back to 2003.
I installed xoops correctly, set up the MySql db, gave directories proper permissions, and I'm getting:
Could not connect to the database server.
Using IIS 6.0, PHP 4.4.6, MySql 4.1.22-community-nt, and Xoops 2.0.
I read many, many posts about this issue, have tried lots of things, and still getting the error.
The app should take care of this issue for me.