This issue is often caused by issues related to permissions or wrong ASP.NET version set.Two things to try:
1) The most likely issue is that you have not set ASP.NET to 2.0 in your control panel for the specific site. This can be done from the website properties(click on the website, then click on Extensions). The default is 2.0(Integrated Pipeline), that is not the same as 2.0 so switch it to just 2.0 with no Integrated Pipeline.
2)If that doesn't fix the issue, and research doesn't point to the exact issue, you can use the following Workaround:
Simply choose "Typical" setup, then fill in the proper database name, user, pass(choose to not run as owner). Then, click next. It will start the "Running Database Installation Script" but nothing will happen like before. Simply refresh the page, you will then be given the choices:
-Custom
-Typical
-Auto
As you may have noticed, "Auto" was previously blurred out. It is now an available choice(because the Typical option updated the web.config with the proper database user/pass). Choose Auto and it will work.
DotNetNuke (DNN) Installation using "Typical" install option stuck on "Running Database Installation Scripts" [Fix+Workaround]
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