I've been running zenphoto before, and having the same issue. Then i eventually got around it but don't remember how.
[http://drunkforfun.se]
[http://drunkforfun.se/zp-core/admin.php]
[http://drunkforfun.se/zp-core/setup.php]
**The DB user/pass, works with the MySQL query editor/ MySQL Administrator**
When I run setup.php for the first time, it asks me for the db settings. I provide them and click Save and run the setup.php file again. But it still asks me for the same settings, the settings I just entered are no-where to be found. And I can keep on doing this ritual to the end of time.
So what I did was to manually set the settings in zp-config.php, and setup.php will let me continue to the admin section, asking for admin-name & pass & realname & e-mail. I enter those and click save. Then I get redirected to the same page asking me for the same settings.
I looked up the administrators-table, and it contains no username, nor anything else.
The entire folder is chmod 777