Got this off some FAQ. I'm guessing something else (possibly Outlook Express) is attempting to access your mail server at the same time:
"This is the result of the POP3 design. According to the POP3 specification, only one client can access a maildrop at any given time. Once a client has been authenticated, that mailbox is locked and remains locked until the client issues a Disconnect (equivalent to the POP3 QUIT command) or the server times out.
In this case, your application has been authenticated and the protocol has entered the Transaction state, at which point the mailbox is locked. However, when the line drops, the TCP connection is terminated but the mail box was not explicitly unlocked (thus remains locked). Issuing a Disconnect will have no effect because the problem is on the server, not with the control. Ultimately, the server times out (according to the spec. the timeout must be at least 10 minutes although some servers seem to be shorter).
The reason why you are getting an incorrect password error is because the authentication process involves a series of commands and responses. The control first introduces you to the server, and the server responds positively. Next, the control issues the logon name and the server responds positively and prompts for a password (if the logon name was valid). Finally the password is issued. If the server is able to access and lock the mailbox, it will respond positively.
However, if the server cannot access the mailbox for ANY reason (such as if the mailbox was previously locked), it must respond with a negative acknowledgement. As far as the control is aware, the connection failed because the server rejected the password command.
The only solution is to trap the error and wait for the timeout period to elapse." - http://www.mabry.com/faq/mail0000.htm