I found the error.

In the very first screen for the installation, it asks the hostname, port, username and password.

If you change the username from localhost to anything else, the database will not be able to be installed, since it cannot resolve the name of the odoo hostname if it is not the hostname of the server or pc where Odoo is hosted on. 

This must and should be better explained with a Tooltip for that screen where the hostname is defined.