Holy necro threads Batman!!!
But yea, as Bakersman said, you need to run a sql query to make MySQL 5 work with authencation from MySQL 4 apps, which of course is the emulator.
So you understand fully, open up your MySQL Command Line Interface, and type in the following,
Code:
set password for 'root'@'localhost' = OLD_PASSWORD('newpwd');
Substitute
newpwd with the password you used when running the MySQL Server Instance Config Wizard.