Database Connection Error

I set up a database on my godaddy account.

I want to install Drupal in a subfolder on my hosting account since it will be used for a secondary site hosted on my personal web account. (That is, instead of install Drupal on the main level of the hosting account directory, I created a subfolder and uploaded all of the Drupal files into it. I currently do not plan to use Drupal with my main Web site, just for teh secondary site.)

After I updated the default.settings.php file, saving it as settings.php, and uploading to the server, I go the subfolder in my browser, and see the first page of installation asking for my language preferences.

When it asks for my database, I ented the database name, username, and password. I get the following error, when I click SUBMIT:

"Failed to connect to your MySQL database server. MySQL reports the following message: Can't connect to local MySQL server through socket '/usr/local/mysql-5.0/data/mysql.sock' (2)."

When I set up the database using the interace on godaddy, it seems that the database name and username are the same. There is a hostname, but I only had the option to enter a description, database name/username, and password.

I updated the default.settings.php file using the same information.

(1) Does it make sense that the database name and username be the same?
(2) WIll there be a problem having all of the drupal files in a subfolder? Will Drupal be able to connect to the database still, or does Drupal assume Drupal is being install on the main level, rather than in a subfolder?
(3) Is there a work around to this?

Thanks!!!