Doesn't accept current password. Accepts old password on reset through recovery mode

Hi,

I am really frustrated with the way my Macbook Air(M1 chip) is behaving from last few months. I have upgraded my mac to latest version of Ventura OS.

All of a sudden, it wouldn't accept login password. Coz of this I had reset my password using Reset Password assistant as instructed here. Once password is reset to a new one, it doesn't accept newly set password, but would accept old one. This has happened numerous times.

I am really not sure what's wrong here.