Assuming your database name is 'atom', can you do this from the command line (on the same machine you installed AtoM on)?
mysql -h localhost -u root atom
If that still gives you an access denied error, you have a root password set and you'll need to find it out and use it during the AtoM install.
The only other thing I can think of: is your mysql server on the same server as your webserver and AtoM? If not, you'll have to change localhost to the IP address of your mysql server.
Hope this helps!