just to clarify for us...
-------- I don't think this is your setup: --------------
you installed AIM executable on PC1
MySQL is on Server1
This gives connection error when starting AIM
On PC1, you can connect (using MySQL workbench) to Server1
--------- after re-reading, possibly this -------------
Yet on this hosted server where mySQL is running on the same server I get the error.
you installed AIM executable on Server1
MySQL is on Server1
This gives connection error when starting AIM
On Server1, you can connect (using MySQL workbench) to Server1
if so, then Firewall has nothing to do with it.
And "localhost" should work just fine.
Try adding your port #, even if you're still on default 3306
--------- for testing, you tried this -------------
you installed AIM executable on AWS server Windows Server instance
MySQL is on AWS
Executable installed on AWS connects fine
FWIW, remember that we (AIM) had a severe Email limitation on Upcloud.
For some reason, emailing from Aware had a significant problem - yet all other things were fine.
Perhaps you need to try ANOTHER hosting service in case you are chasing a problem which has no solution... because you have proved this works fine on AWS.