Scenario:
I gave a wrong user name and the engine-setup wizard failed and got out instead of asking the user for the remote db details again.

2012-04-05 20:04:02::DEBUG::common_utils::420::root:: Found IP Address: 10.35.97.68
2012-04-05 20:04:02::INFO::engine_validators::384::root:: Trying to connect to the remote database with provided credentials.
2012-04-05 20:04:02::DEBUG::common_utils::337::root:: running sql query 'select 1' on db server: 'rami-fed16-db.qa.lab.tlv.redhat.com'.
2012-04-05 20:04:02::DEBUG::common_utils::273::root:: cmd = /usr/bin/psql -h rami-fed16-db.qa.lab.tlv.redhat.com -p 65432 -U ramivb -d postgres -c "select 1"
2012-04-05 20:04:02::DEBUG::common_utils::278::root:: output = 
2012-04-05 20:04:02::DEBUG::common_utils::279::root:: stderr = psql: FATAL:  role "ramivb" does not exist

2012-04-05 20:04:02::DEBUG::common_utils::280::root:: retcode = 2
2012-04-05 20:04:02::ERROR::engine_validators::390::root:: Could not connect to host rami-fed16-db.qa.lab.tlv.redhat.com with provided credentials. Check that your settings are correct.
2012-04-05 20:04:02::DEBUG::common_utils::337::root:: running sql query 'DROP DATABASE IF EXISTS ovirt_engine_test;' on db server: 'rami-fed16-db.qa.lab.tlv.redhat.com'.
2012-04-05 20:04:02::DEBUG::common_utils::273::root:: cmd = /usr/bin/psql -h rami-fed16-db.qa.lab.tlv.redhat.com -p 65432 -U ramivb -d postgres -c "DROP DATABASE IF EXISTS ovirt_engine_test;"
2012-04-05 20:04:02::DEBUG::common_utils::278::root:: output = 
2012-04-05 20:04:02::DEBUG::common_utils::279::root:: stderr = psql: FATAL:  role "ramivb" does not exist

2012-04-05 20:04:02::DEBUG::common_utils::280::root:: retcode = 2
2012-04-05 20:04:02::ERROR::engine-setup::1632::root:: Traceback (most recent call last):
  File "/usr/bin/engine-setup", line 1610, in _handleInteractiveParams
    postConditionValue = _getConditionValue(group.getKey("POST_CONDITION"))
  File "/usr/bin/engine-setup", line 1649, in _getConditionValue
    returnValue = matchMember(controller.CONF)
  File "/usr/share/ovirt-engine/scripts/engine_validators.py", line 269, in validateRemoteDB
    basedefs.DB_POSTGRES, sqlQuery, True)
  File "/usr/share/ovirt-engine/scripts/common_utils.py", line 339, in execRemoteSqlCommand
    return execExternalCmd(cmd, failOnError, errMsg)
  File "/usr/share/ovirt-engine/scripts/common_utils.py", line 283, in execExternalCmd
    raise Exception(msg)
Exception: Failed running sql query