Access Denied is a mysql access error, nothing to do with accounts.
If the GRANT command doesnt work, the server will never work, it can't get data from the database.
Go to:
www.mysql.com
and look in the mysql documentation for instructions on the GRANT system, it's pretty simple. You're most likely just typing something in incorrectly.
Also, the mysql user has NOTHING to do with any EQEMU logon accounts, it's only used by the world and zone servers for contacting the database.