1) No, thats not related. The permissions of the ispconfig user are defined in the db table, not the user table. All mysql users that have only access to a specific database like the ispconfig user have their permissions set to "N" in user table and to "Y" in db table.
2) Test the login for the ispconfig mysql user:
mysql -u ispconfig -p dbispconfig
the command will ask you then for password. Please specify the exact password from the config.inc.php file.
4) The user ispconfig is the correct user and the permissions you describe are correct for the ISPCOnfig user. It is required that the priv columns are set to 'N' for the ispconfig user in the user table.