This is a fairly common problem. It is surprisingly common with users who
have Comcast as their ISP. It is due to a timing issue between Mail
and certain ISP's. Mail gives your account password before your ISP's
server is ready for it. When the server is finally ready for it, the
password has already been given, and the server must request it again.
There is a potential work-around for the problem here:
Apple - Support - Discussions - random password request in mail ...
"...[go] into the Keychain application, located in the Utilities
folder. In the upper left column, highlight "log-in." In the lower
left column, highlight "passwords." In the right window scroll until
you find your "mail.comcast.net and smtp.comcast.net" or whatever your
internet service provider incoming/outgoing mail servers are called.
Double click on each which will bring up an attributes/access control
window. Select access control. Then select the bullet next to "allow
all applications to access this item." Make sure you do this for both
the incoming server (mail.comcast.net) and outgoing server
(smtp.comcast.net) keychain items. "
Other theories:
Macworld devoted a 911 column to it:
http://liten.be//D2P5J
Betalogue » Apple Knowledge Base article on ‘server rejected password’ error message in Mail
___________________________________________
Randy B. Singer
Co-author of The Macintosh Bible (4th, 5th, and 6th editions)
Macintosh OS X Routine Maintenance
OS X Maintenance And Troubleshooting
___________________________________________