It's so strange. I tried reinstalling the protocol plug-in and it didn't help. The error would come up right after I hit "Sign On" so I guess it wasn't even trying to connect at all. I went into the Accounts setup and re-entered the password, changed the Alias to something without space. Now it works! I thought it was that Alias field doesn't allow spaces but afterwards I went back and changed the Alias to "Keyser Soze" and it still works now. Really don't know what was wrong in my first attempts...

Peter