If you haven't already done so and if you have no reservations about reflashing your N800, I would strongly encourage you upgrade to OS 2008 for more than one reason, not to mention the manifold feature enhancements you will receive at the same time.

Then, directly thereafter, go straight to installing Rhasody, register your existing account and try playing again...

The # of times it has happened to me, there was nothing wrong with my setup and the login error went away within hours of opening a call ticket (I would speculate they took corrective action on their end, but pleaded insanity).

So upgrade to OS 2008 and retry.
Good Luck!