Just downloaded and tried to install locally. I get the error in step 3 of 3, when it tries to create my admin user (got it also with the vanilla.sql) and now when creating new users (after manually creating admin)
I'm not sure what the official SQL rules are about treating empty strings as null, but apparently the way MySQL treated the issue changed between version 4 and 5, and that caused some stuff to break.
mark, can we pluck the requirement for vanilla having to write out an info.php and testing the images directory? for some reason, half the servers I've attempted it on, the installer seems to choke at that point.