You are receiving these errors:

Connect Error (2000) mysqld cannot connect to MySQL 4.1+ using old authentication

ERROR 1275 (HY000): Server is running in –secure-auth mode, but ‘dbname’@’localhost’ has a password in the old format; please change the password to the new format

ERROR 2049 (HY000): Connection using old (pre-4.1.1) authentication protocol refused (client option 'secure_auth' enabled)

ERROR 1372 (HY000): Password hash should be a 16-digit hexadecimal number

Your system is definitely storing passwords in the new format.     You are going crazy because your database is offline.

UPDATE mysql.user SET Password = PASSWORD(‘cheese’) WHERE User = ‘test’ AND Host = ‘localhost’;
UPDATE mysql.user SET plugin = ‘mysql_native_password’ WHERE User = ‘test’ AND Host = ‘localhost’;
flush privileges;