You need to make sure that the user you've entered in the database section actually has rights to create a database. Quite often, you have to create the database first using whatever process your host has in place. Once that's done, it usually creates a user to go along with that database. If you already have a database created that you use for other installations, I suggest that you use that database along with the user that was assigned to that DB.
When you'll have the right user and right database entered in the settings, it should come up again with the setupSQL.php link. Clicking it will create the table in the DB you've specified. After that, you'll be able to enter and save events using the Events Manager.
PS: The reason why you want to use the same database is that if you are using the calendar inside of a content management system (Nuke, Joomla, phpWS, etc...) anything that is supposed to appear after the calendar won't show up. The reason is because the CMS establishes its connection to the database at the begining of the script and assumes the connection will stay active until the whole page is loaded. So if you display the calendar midway, using a different DB, the CMS will try to find the info it's looking for in the calendar DB, which will fail.
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-- Gervais
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