confused need help:
First of all, welcome to the apple forums. However, if your issue is not related to duplicate email messages in Snow Leopard Mail and Microsoft Exchange 2007, but rather your inability to authenticate to your me.com account only, I would encourage you to post your own new thread or research other threads in this forum concerning password issues for a solution. It is not apparent from your post that your problem is related to duplicate messages and Microsoft Exchange Server 2007.
To post a new thread, note the "Post New Topic" icon and link underneath the "Forum : Mail and Address Book" heading
here. You may have better luck in getting your problem addressed without muddying the waters here with unrelated problems. Unless you are getting that popup while attempting to access your Microsoft Exchange account, but that was not apparent from your post.
That said, try deleting your smtp.me.com entry in your keychain and resave it anew next time in Mail. Hope that helps!