When the Microsoft engineers originally designed Outlook 2002 they had the bright idea of implementing a multi-threading feature, which means that Outlook tries to access your email account several times simultaneously. This can have some advantages, but unfortunately the majority of mail servers don't support it.

When Outlook tries to access the mailbox the first time, the server locks it. The second and subsequent times that Outlook tries to access the mailbox the server responds with a "POP lock" error, which Outlook mistakenly reports as a password error.

The only fix to this problem is to go to the Microsoft Office Update site and install all of the updates. You must have a least Service Pack 2 to fix the problem. When you restart Outlook you will probably be prompted for your password again, but only once, and then the problem will go away.

You could also get around this problem by using IMAP, but this is likely to cause quota problems because IMAP leaves the mail on the server.