Finally I found a reference (sorry I don't remember what website) that suggested trying to delete all my saved passwords. Sure enough, that did it. Even though when I had recreated the account I was challenged for password input on the first time, it had still failed. Also, I had copied and pasted the password from an alternate source, so I didn't make a typo. Some how the storage for passwords, just for the single account, was corrupt.
If you use Thunderbird on Windows, to delete your passwords go to:
- Tools >> Options
- Click Privacy
- Click the Password tab
- Click Edit Saved Password
- Either click Remove All OR select the ones you want to delete and click Remove
- Click Close and click OK