I rolled back my Virtual Machine and checked permissions and tried again. Odd, it still throws a 500 for what should be a "Database connection error".
In fact, on a plain WP install, simply changing the DB_NAME to something incorrect causes a 500 Server Error and not the expected DB error message. I am using a wildcard subdomain for "dev.mywebsite.com". Could that be it? I thought I have seen legitimate "DB connection error" messages on Nginx prior; perhaps they were "www" sites.