Not sure if this may be the issue, but make sure you are working in the correct SQLSiteServer strings in the web.config. The default is for SQL Express and you need to comment out those strings in two sections and then uncomment the SQL connection strings. Enter in the data for your database( may just to use sa for the user until you do this a few times)

At this point I would delete the DB and the virtual directory to make sure everything is clean. Set your connection strings and permissions on the file system and then try again. Make sure you test everything that has an option for test during the InstallWizard as it can give you some clues if you miss a step.

hth

Bruce