Windows Live Sign-in says your password is incorrect.

Problem:

Your program is saying that your windows account password is incorrect - even though it's not.

If you're having trouble signing into MSN chat with a third party - you probably have dual-authentication turned on.


Solution: 

If you sign into your MS account, click your profile in the upper right. Go to account settings, and then advanced account settings.

You'll see "App Passwords" -- choose Create a new app password.

It'll give you a long string which you then paste into the appropriate password field instead of your normal password.

You should then be able to sign in