Elxis makes a check there if the database you provided exists and tries to change encoding settings (if DBtype is MySQL). You have php under safe_mode that restricts the "create database" command, and this causes an error. If you can not remove the PHP's safe_mode restriction open installation/install2.php and comment (put a '//' in front of them) the lines 90 to 105. In the end your install2.php will look like this:
//check database character set and collation
//if (eregi('mysql', $DBtype)) {
//$rs = $db->Execute("SHOW CREATE DATABASE $DBname");
// $dbInfo = $rs->FetchRow();
//$defcharset = '';
//$pattern = '/40100 DEFAULT CHARACTER SET (\w+) /';
//if ( (preg_match($pattern, $dbInfo[1], $match) > 0) ) {
// $defcharset = $match[1];
// }
//if (!eregi('utf8', $defcharset)) {
// $db->Execute("ALTER DATABASE $DBname DEFAULT CHARACTER SET 'utf8' DEFAULT COLLATE 'utf8_general_ci'");
//}
// $db->Execute('SET NAMES utf8'); //datahell 28.09.2006
//}