Thanks Helen,
That version problem might explain a few peculiar things that we've noticed with accounts in mysql. I'll have to look more closely and see whether it might be a factor.
Happily we did figure out (finally!) that we needed to be very specific about setting our dbhost variable in the moodle setup. I had assumed that 'localhost' was getting automagically resolved into the correct value for our install. Evidently not.
So now it's on to the next challenge.
Josh