Error running MySQL (XAMPP) on Windows 7

XAMPP Ver: 1.7.7 (win32)

I was getting error: #2002 Cannot log in to the server.

I first uncommented my.ini - bind-address="127.0.0.1". Then the error changed to "Invalid settings"

Then I changed passwords from Apache Admin page - Security - Link for updating security settings.

I changed "config.inc.php" under \xampp\phpmyadmin folder - $cfg['Servers'][$i]['password'] = 'root'.

Finally I checked my firewall - it was "Rule Based" for the process "mysqld". I changed it to "Allow All Activity"

Restarted Mysql from XAMPP control panel.

It worked! Will find the exact reason later!