Every time I open Firefox I get an error msg "Sync encountered an error while syncing:Incorrect account name or password. I need to reset my password and update

Operating System: Windows XP
Firefox Desktop version: 17.0.1
My Privacy settings for Clearing History:
When I quit Firefox, it should automatically clear all:
History - all boxes checked
Data - No boxes check
Here is my sync-log file:
<pre><nowiki>1354415554470 Sync.Status DEBUG Status.service: success.status_ok => success.status_ok
1354415644475 Sync.Service DEBUG User-Agent: Firefox/17.0.1 FxSync/1.19.0.20121128204232.
1354415644475 Sync.Service INFO Starting sync at 2012-12-01 21:34:04
1354415644476 Sync.SyncScheduler DEBUG Clearing sync triggers and the global score.
1354415644476 Sync.Service INFO In sync().
1354415644476 Sync.Status INFO Resetting Status.
1354415644476 Sync.Status DEBUG Status.service: success.status_ok => success.status_ok
1354415646726 Sync.Resource DEBUG Channel redirect: https://phx-sync553.services.mozilla.com/1.1/cqvxgzgzfgob76uyg5uyrs6zc36optje/info/collections, https://phx-sync553.services.mozilla.com/1.1/cqvxgzgzfgob76uyg5uyrs6zc36optje/info/collections, 4
1354415646992 Sync.Resource DEBUG mesg: GET fail 401 https://phx-sync553.services.mozilla.com/1.1/cqvxgzgzfgob76uyg5uyrs6zc36optje/info/collections
1354415646992 Sync.Resource DEBUG GET fail 401 https://phx-sync553.services.mozilla.com/1.1/cqvxgzgzfgob76uyg5uyrs6zc36optje/info/collections
1354415646992 Sync.Service INFO Logging out
1354415646992 Sync.Status DEBUG Status.service: success.status_ok => success.status_ok
1354415646993 Sync.SyncScheduler DEBUG Next sync in 90000 ms.
1354415646993 Sync.ErrorHandler INFO Got 401 response; resetting clusterURL.
1354415646993 Sync.ErrorHandler DEBUG New mid-sync 401 failure. Making a note.
1354415646993 Sync.ErrorHandler INFO Attempting to schedule another sync.
1354415646994 Sync.SyncScheduler DEBUG Next sync in 600000 ms.</nowiki></pre>

I had the same problem and I fixed it as following (See if it's the same case for you) :
1. Goto Tools > Options.
2. Under Advanced, select the Network Tab.
3. Click on Settings in the "Connection" box (open connection settings).
4. Check if "Automatic Proxy Configuration URL" is selected. If it is so, select "No proxy" instead or manually enter your proxy if you are using one.
The option "Automatic Proxy Configuration URL" was the culprit for me and some others as well and selecting "No proxy" instead cured our problems. It is a bug and has already been reported on Bugzilla as you can see here :
https://bugzilla.mozilla.org/show_bug.cgi?id=734828

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This was working just fine until the update. I did the reset password. It says it is reset, but when I exit firefox and restart, I get the same error. I've put in the new password and get the same error. This almost looks like my account was deleted from the sync server, but when i do the reset password, everything says it is ok. But Firefox keeps giving me this error.

See:
*https://services.mozilla.com/status/
*http://twitter.com/#!/mozservices

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