What version are you running?
1.7.7.1
What's the URL of the page containing the problem?
site-create master
What steps will reproduce the problem?
1. run site configuration master
2. go to the password for admin step
3. enter mismatching passwords
What is the expected output?
System informs you about mismatching passwords, master doesn't proceed, password can be corrected
What do you see instead?
System accepts any data you send, does all the actions, and on the final step reports that your passwords are wrong, and abort installation.
What operating system are you using? What browser?
Debian 6.0, MySQL 5.1, browser independent issue
The same issue you can see in database connection string -- entered data is not verified, and the installation aborts in the middle.
The best solution here (in my point of view) is to verify data, and, probably, to test the connection before the master ends. I mean, after the database connection parameters is set, the system checks if connection is available, and warn user in case of any errors. Now in case master is failed you should do lots of operations to rollback system to the initial point.