If the password has single quotes (U+0027), the added backslashes would have been taken out by the fix in step2.php (to make mysql_connect() work). Unfortunately this means when the password is written to config.inc.php, they would be unescaped. The result is a config.inc.php with syntax errors.

This was not a problem before step2.php was fixed because in an unpatched system passwords with U+0027 just do not work.