I really like Apple's way with Lion, OS-X 10.7.5, haven't upgraded to Mountain Lion yet so I don't know if it's the same there too, of showing the password you typed is wrong. Instead of displaying some irritating message about how stupid or forgetful you are, the box shakes back and forth, like saying, "Nope. Please try again."
I think it's cool. To bad they can't or won't do the opposite when you type it in correctly, like a little ballon with "Thank You." floats from the top of the popup box. You know, a little positive reinforcement goes a long way.
But then I'm sure some folks would hate it, so maybe make it user settable. I can see their perspective, the 2+ years I used a PC at work, I really hated Windows, MS Office, and especially Mr. Clippy. You wanted to show the little thing, but you'd be hard pressed to explain a new monitor to the IT chief.
But still I like the try again message, kinda' like you do when someone is saying something wrong or stupid. You just shake your head back and forth and the words implied depend on your expression. At least the box doesn't smirk, "I know something you don't. Like your password."