Looks like you might be logged in as annonymous and you aren't permitted to create users.
Tessa found this reference and I went through some more thraads on the forum and this seems likely.
www.apachefriends.org/f/viewtopic.php?p=186819
Do you know if you're logged in as root or another user?
The best place to get help with this would be the apachefriends.org forum and the help documents thay have there.
If I was having this problem, I would reinstall xampp and when it asks for the mysql user I would use root and no password. But you may have done that already. I don't kow how you set it up.
Try asking the same question on
www.apachefriends.org/f/
Ed