BUG #5249: PGUSER has to be set in the console for PSQL to authenticate

The following bug has been logged online:

Bug reference:      5249
Logged by:          Ashis Anand
Email address:      Ashish.The.Dev@Gmail.com
PostgreSQL version: 8.4.1 bld1400
Operating system:   Windows & 32 bit
Description:        PGUSER has to be set in the console for PSQL to
authenticate
Details:

Hi everyone,

My first bug.

                           version
-------------------------------------------------------------
 PostgreSQL 8.4.1, compiled by Visual C++ build 1400, 32-bit
(1 row)

Problem Statement: PGUSER has to be set for PSQL to authenticate. If left
unset the connection to database fails with the error mentioned below.

STEPS:
1. Install PostgreSQL.
2. Start psql from start menu
3. create a role for the user 'foo' through the following statement
        CREATE ROLE foo LOGIN CREATEDB CREATEROLE PASSWORD 'bar'
4. Create a database mydb
         CREATE DATABASE mydb WITH OWNER = foo
5. Open your normal console where pguser is not set
6. Run: "psql mydb"
7. Enter the password as 'bar'

Actual output:
psql: FATAL:  password authentication failed for user "foo"

Expected output:
psql (8.4.1)
WARNING: Console code page (437) differs from Windows code page (1252)
         8-bit characters might not work correctly. See psql reference
         page "Notes for Windows users" for details.
Type "help" for help.
 mydb=>

8. Run: SET PGUSER=foo
9. Run: "psql mydb"
10. Enter the password as "bar"

Actual output:
psql (8.4.1)
WARNING: Console code page (437) differs from Windows code page (1252)
         8-bit characters might not work correctly. See psql reference

If anything else is required, please let me know. But I guess this would
probably be a known bug.
         page "Notes for Windows users" for details.
Type "help" for help.
 mydb=>