problem with gaining access in MySQL

[demen_03]

when trying to load world.exe I got this:
LoginServer.ini read.
Failed to connect to database: Error: Access denied for user: 'demen_03@127.0.0.1' <Using password: YES>

so I tried:

And if that does not help. Open mysql.exe ( found in c:\mysql\bin )
Type in: GRANT ALL PRIVILEGES ON *.* to '%'@localhost IDENTIFIED BY '%'; (press enter)
Close out of mysql.exe

which I found at http://www.eqemu.net/documents/readme.html#part2 (yes I replaced % with username)

then I got:
ERROR 1064: You have an error in your SQL syntax. Check the manual that corresponds to your MySQL server version for the right syntax to use near '%' at line 1

(I read the manual in MySQL folder and found nothing that helped me)

DB.ini reads:
[Database]
host=localhost
user=demen_03
password=*****
database=eq

loginserver.ini reads:
[LoginServer]
loginserver=localhost
loginserver2=localhost
loginport=5999
loginport2=5999
worldname=Screwin' around
locked=false
account=
password=
worldaddress=localhost
loginport=5999

[LoginConfig]
ServerMode=Standalone
ServerPort=5999
UplinkAdress=
UplinkPort=
UplinkAccount=
UplinkPassword=

Boot5zones.bat reads:
REM:--------------Start-----------------------


@echo off
start zone9x . localhost 7995 localhost
start zone9x . localhost 7996 localhost
start zone9x . localhost 7997 localhost
start zone9x . localhost 7998 localhost
start zone9x . localhost 7999 localhost
exit
cls


REM:---------------END------------------------

Any help would be very greatly appreciated. Also let me know if I left out any info that might be needed.