So you installed XAMPP 1.7.0 correctly, is that correct?
After installation was complete you check in the XAMPP Control Panel that Apache and MySQL had a green running indication, is that correct?
After you see that Apache and MySQL are running you then went tohttp://localhost
and selected you language and then saw the Welcome Page, is that correct?
You then proceeded to test your XAMPP installation by running the demos including the CD Collection demo to test MySQL, is that correct.
Now lets move on - exactly what detailed error messages have you received when trying to install Joomla?
Please for easy reading of posts do not write everything into a single paragraph - it is hard to understand what you have posted, all jumbled up.