Installation of 5.5.16 fails on "Apply Security Settings" (32-bit XP) (no replies)

I am trying to install MySQL 5.5.16 on a 32-bit XP machine (SP3). The install goes fine and the configuration wizard starts. I accept all the defaults, enter a password for root, and execute. Note that I did not allow remote access for root.

The process fails when it gets to "Apply Security Settings". After a long time, I get the error message:

Error Nr. 2003
Can't connect to MySQL server on 'localhost' (10061)

I have spent the entire day looking for a fix. There is no shortage of posts about the problem, but no published fix that I'm aware of.

Note that I am able to use the command line to run "mysql" and login as "root" with no password. I guess the "Apply security" step is supposed to update the mysql.user table and can't connect to do so.

I also installed Navicat Lite 10.0 and it was unable to connect to the database.

The MySQL service is running according to Windows and I see the "mysqld.exe" in the process list. I verified that the line "127.0.0.1 localhost" is the first entry in the "hosts" file (saw some messages indicating issues with ipv6?).

So what do I need to do to fix this install? Thanks in advance for any help...