Movable Type Knowledge Base: Invalid Login with Third Party Clients. Hey I am now using Judy's Book for doing all reviews. So I needed to use the so called third party client API. Beware, that if you moved to MovableType 3.2, there is now a new parameter called the API Password which is used for this. It is not the same as the web login.
So you have to set this in profile menu of MovableType and then change it.