I know now that this is not a x64 issue.
I have just had a new server built, clean install of Server 2003 R2 (x86), MySQL 5.0.27 and PHP 5.2.
I create the database, create the user, assign it full permissions to the db and still get the same error
The User/Pass combination connects fine if I use any other tool to connect to the db - it is only the WHMCS installer which doesn't like it.
I do not use cPanel .. I simply want to use WHMCS as a CRM system, hence the instructions to put the cPanel username before the dbusername and dbhost do not apply..
Will open a support ticket.
L