i've run into the same problem. Running wordpress 2.6.0, and was fiddling around with settings in Askapache password protect. I managed to do something wrong and it kept asking me for passwords to do anything. I put in the password, still not working. (I'm using Mozilla Firefox 3.0, and also tried this with IE, get the same prlblem on both).
In PP it asked me to verify my password, so I did.
Now I can't get in to my dashboard to edit my blog. I do get the dashboard screen, but as soon as I try to log in, a little box pops up that asks me for name and password.I put that in, it won't let me in; eventually I get a screen that says:
This server could not verify that you are authorized to access the document requested. Either you supplied the wrong credentials (e.g., bad password), or your browser doesn't understand how to supply the credentials required.
Additionally, a 500 Internal Server Error error was encountered while trying to use an ErrorDocument to handle the request.
Apache/1.3.41 Server at XXXXXXXXX Port 80
So, I went in and deleted the PP plugin, deleted the .htaccess in wp-admin, took out the PP info in the main (root) .htadmin, and deleted the .htapassword3 file.
I am still being asked for the password, and I've trashed my cache in both browsers. What am I missing?