I resolved this problem this way:
-If you haven't installed mysql as a service yet, do that by running c:\xampp\mysql\mysql_installservice.bat
-Go to the Services Panel (amongst other ways, you can use Start->Run services.msc)
-Find the mysql service, right-click and go to Properties
-on the Log On tab, check the box next to "Allow service to interact with desktop"
-start it up and test it
Hopefully it works for you, it fixed it for me.