Try this:
At the command prompt: (START->RUN->CMD)
cd\mysql\bin
mysql -u root mysql
grant all privileges on eq.* to username@localhost identified by 'password' with grant option;
(replace username/password with your winmysqladmin username//password).
I used the following (also several others :P ) link to setup my server:
http://www.eqemulator.net/forums/viewtopic.php?t=13403&highlight=sql+server+setup
I hope this helps!