For those of you getting the "can't connect to mysql server on 'local host'" message:
I have been tackling this issue for the past four days and with some guided direction from drzoid in the 'configure your server' forum, I've figured out how to get rid of that annoying error message. It was my firewall.
I am running Norton and here's what I did:
1. Open Norton and click on personal firewall > configure
2. In the new windows click on the tab that says Program Control
3. Find your programs ( for me mysql.exe and mysqld-nt.exe) and click on them
4. Change your internet access to Permit All
Afer I made these changes I was able to finally start doing mysql commands at the command prompt.
I am posting this here in the hopes that the next person who stumbles across this problem will do a search in these forums and find this message. Maybe I'll save someone four days of headache!