Looks as if you dont have a root user in your mysql setup anymore. You can check this e.g. with the command:
SELECT * FROM mysql.user WHERE User="root"
but when I attempt to create a new database - ISPConfig states it's all good to go but I am unable to login at all.
If you dont have a root user in mysql or the password is wrong, then ispconfig can not create databases as it logs into mysql to create the databases as root user.