Database error after network setup, caused by SUBDOMAIN_INSTALL

I'm setting up a network install following this guide:

I've added the content to my .htaccess and wp-config.php as requested in the Tools > Network section

Then I click 'Log In' as per this message:

Once you complete these steps, your network is enabled and configured. You will have to log in again. Log In

I end up with this error: Error establishing a database connection

I've narrowed it down to this line in the wp-config.php. When I comment it out, I can at least login:

define('SUBDOMAIN_INSTALL', false);

Thoughts? This was a fresh install that appeared to be working before turning on MS. FYI, this was test site I setup on my Lunarpages account on a domain that is already being parked in a subdirectory, but doesn't appear that way when the domain name is accessed directly. I don't know if that would make a difference.