Ruby on Rails

I have somewhat of a complex issue involving several different programs
including redmine, MySQL, Ruby, Ruby on Rails etc.

I am following the redmine instructions here:
http://www.redmine.org/projects/redmine/wiki/RedmineInstall

I am on step 5. where I am suppose to type "RAILS_ENV=production rake
db:migrate"

When I type this in the command prompt and hit enter I get an error:
"RAILS_ENV" is not a command blah blah.

So I reorder it to: rake db:migrate RAILS_ENV=production

This seems to work correct, but I get the following:

===============================================================
C:\redmine-1.2.1>rake db:migrate RAILS_ENV=production --trace
NOTE: SourceIndex.new(hash) is deprecated; From
C:/redmine-1.2.1/config/../vendo
r/rails/railties/lib/rails/vendor_gem_source_index.rb:100:in `new'.
rake/rdoctask is deprecated.  Use rdoc/task instead (in RDoc 2.4.2+)
WARNING: 'task :t, arg, :needs => [deps]' is deprecated.  Please use
'task :t, [
args] => [deps]' instead.
   at C:/redmine-1.2.1/lib/tasks/email.rake:170
** Invoke db:migrate (first_time)
** Invoke environment (first_time)
** Execute environment
rake aborted!
Access denied for user 'redmine'@'localhost' (using password: YES)

Here is my database.yml file contents:

###############################################################

# MySQL (default setup).

production:
 adapter: mysql
 database: redmine
 host: localhost
 username: redmine
 password: **********
 encoding: utf8

development:
 adapter: mysql
 database: redmine_development
 host: localhost
 username: root
 password:
 encoding: utf8

# Warning: The database defined as "test" will be erased and
# re-generated from your development database when you run "rake".
# Do not set this db to the same as development or production.
test:
 adapter: mysql
 database: redmine_test
 host: localhost
 username: root
 password:
 encoding: utf8

test_pgsql:
 adapter: postgresql
 database: redmine_test
 host: localhost
 username: postgres
 password: "postgres"

test_sqlite3:
 adapter: sqlite3
 database: db/test.sqlite3

###############################################################