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I have the same problem, with all my accounts (see ticket 1266). I have a plain FTP account, and SFTP and an FTPS. They all keep on rejecting my passwords even though they are guaranteed to be correct. I can recommend reverting to version 2.7.3, if you can still find an installer. There everything works as it should.
I have had this problem twice on two different machines. Each time quitting Cyberduck, clearing out the ~/Library/Application Support/Cyberduck/History/ folder, then starting Cyberduck back up and trying again fixed the issue for me.
After more investigation, I am not convinced that removing the history had anything but a coincidental connection; it forced the user to re-enter the password using a method other than the login password error modal dialog.
I now believe the problem is related to clicking Login instead of hitting enter. When Login is clicked with the cursor still in the password field after having entered the password, passField is not changed in the CDLoginController. Apparently this is expected behavior according to the Apple HIG: