I'm assunming you ran mysql_installdb first, this creates the necessary tables etc for mysql to work. You then need to startup mysql using safe_mysqld.
Once you've got the above running, do this:
to set the password you use :
mysqladmin -u root password 'yourpassword'
You'll need to keep the password with the single quotes.
After that you can create users within mysql itself, login to mysql using
mysql -u root -p
once at the mysql prompt:
use mysql;
grant all privileges on databasename.* to 'user'@'%' identified by 'password for user';
you'll then need to run
flush privileges;
before this new user can login.
If you need any help, let me know.