Am also having the same problem. I spoke the lecturers and was told to use a password when i create the database in mysqlcc. It does not work. I think this is going to be one very late ass for me(ass06).
I have been able to access libmysql.dll. Check if the database u need to access is available in mysqlcc and connected, and also that in delphi u have selected that same database in sqlconnection. hope this helps. That was my prob.
Where did you guys get the control Centre software? It wasn't on my Delphi 7 disk - I got another Gui. Although there are many links to download it, they take you to the developer's website where it isn't so much as mentioned. Clearly it used to be there and isn't any more.
And I also can't get libmySQL.dll to work. However my friend did, and with MySql 5.0 so clearly its possible. He put the driver in the c:\windows\windows32 folder. It didn't work for me, but perhaps it will work for others.
Another suggestion was to try it in the projects folder.