WordPress MU

I've tried to do a local install for development purposes on my Macbook Pro running Leopard (10.5.7) and ran into the following error pages )depending upon whether I choose subdomain or subdirectory):

1 - "You don't have permission to access /~steve/wordpress-mu/wp-login.php on this server."

2 - "Error establishing a database connection" (note:it mentions localhost.localdomain)

3 - "Warning! Wildcard DNS may not be configured correctly!"

4 - "Fatal Error
If your blog does not display, please contact the owner of this site."

I've read good and bad things about wildcard DNS... not sure I want to use it, nor do I really have a good grasp on how at this point. Here's what I've done thus far:

1 - Changed the Apache config file (in the appropriate section) from: AllowOverride None ... to now read: AllowOverride FileInfo Options

2 - Changed my /private/etc/hosts file from:

127.0.0.1 localhost ... to now read: 127.0.0.1 localhost.localdomain

Do I have to use wildcard DNS to make this work?

If you want sub-blogs as username.localhost.localdomain, then yes - you'll need wildcard subdomains. As that's how MU "makes" the subdomain. :)

If you pick the other option on install (subdirectory) then, no - you won't need wildcard subdomains.

walkthru for ya:
http://net.tutsplus.com/tutorials/wordpress/how-to-set-up-a-killer-wordpress-testing-environment-locally/