Ok, I seem to have a workaround to this problem. I do not guarantee that this will get Magento to work 100%, and I take no responsibility for any damages this fix may cause.
What I did was disable the checking of the databases supported. The file containing the function is "app/code/core/Mage/Install/Model/Installer/Db.php". Line 89 checks the database engine support. My fix just comments out the IF condition as follow
CODE
// check MyISAM support
// Force disable checking of database support
/*
if (!$resource->supportEngine()) {
Mage::throwException(
Mage::helper('install')->__('Database server does not support the MyISAM storage engine.')
);
}
*/
I have finished installing Magento 1.7, however I am coming across an error with memory allocation.
Update, I fixed the memory allocation problem by increasing the PHP memory limit, default is 32MB, I used 64MB and is working like a charm.