@Gagan Deep Singh
I tried that already but it didnt work. Oh well D: either way thanks a bunch for your time. Ill see if I can watch a tutorial or something on SSH connection to try what you said.
I still think it has something to do with the compatibility between the password generated by the MySQL4.1+ and the php5.4. Most likely the hashing is different so the PHP5.4 does not work. Dunno its really weird and I have so long with this problem D: Ill Keep looking. Thanks again Gagan :D