For what it's worth: over on the Windows side I see one thread where someone is experiencing a signin popup about enabling automatic downloads every time they fire up iTunes, regardless if they sign in or just cancel out of the popup.
Is that what you are experiencing, or is the language you are seeing just the normal Apple ID sign in dealie?
If it is that ~enabling automatic downloads~ popup, I was presented with that popup twice right after the update to 10.5.1 on the Mac. After seeing it twice, I haven't seen it since. I'm left wondering if that popup is glitchy or whatever iTunes helper service those automatic downloads are tied to is buggy.
- I updated to iTunes 10.5.1 via Software Update late in the day on 11/15.
- iTunes loaded.
- iTunes seemed to already have my Apple ID noted in the upper right-hand corner where it normally is.
- Yet, in front of iTunes, was a popup window asking me to log in to enable automatic downloads.
- It looked legitimate and I did sign in, thinking that I'd use iTunes Match eventually and figuring that the popup was an opt-in bit necessary for either Match or the 10.5.1 update itself.
- Then, after signing in, iTunes / the updater / (?) brought up the same popup a second time. (????)
- It didn't seem to have any different language than the first, nor did it have a warning saying I'd fat-fingered my login the first time or the like. So, gritting my teeth, I signed in a second time.
- That's the last I've seen of it. iTunes isn't asking me to sign in again when I quit / open the application or cycle the system. If I do sign out of iTunes and then sing back in, the signin popup is the normal one, not the one about enabling automatic downloads -- so after seeing that one twice, it's now MIA.
- Also, if that sign in popup is indeed legitimate (but just glitchy?), I'm wondering what it actually does -- the normal iTunes signin doesn't say anything about automatic downloads, iTunes Match is something else you need to purchase, and within Preferences -> Store, the Automatic Downloads section just shows the three boxes of Music, Apps and Books as being unchecked.
Hopefully the others will have some ideas to help you out -- or similar experiences that may help shed more light on the situation.
I reported the bug to apple so it should get fixed soon.