I'm still a newbie, but I've used this program many times.
Seems to me you've followed the instructions to the letter; though I've always worked with a host and not installed locally.
I can only suggest that you revert back to the original password for the admin and user accounts and try to change them from within the program. Also, I'd go ahead and create a password for the database user and put that in the config file. I also noticed you have:
$conf['settings']['database']['password'] = '';
and if you don't have a password wouldn't it be
$conf['settings']['database']['password'] = "'';
Like I said, newbie here, but that's what I'd try. Responses are pretty slow around here, but Nick wil eventually get to you!