On my XAMPP installation I install Joomla! 3.6.5 it gets to the database step, if I put in the wrong credentials it tells me so, if I put in the right credentials it does the loading screen. See this screenshot.
No database tables are ever created, no error message occurs, it just acts like it's loading for ages. It doesn't get to the next screen where it shows the steps for creating a database etc.
My XAMPP has been edited to use port 81, so I have used localhost:81 in my server settings.
I also moved my HTDOCS directory to another drive, and updated all the conf files accordingly using this tutorial https://stackoverflow.com/questions/8847392/how-to-change-xampp-localhost-to-another-folder-outside-xampp-folder.
I edited php.ini so that memory_limit and max_execution_time was higher. I also changed max_upload_size