Q: I'm trying to fix the "Blinking Grey Folder" issue, but for some reason my MBP won't accept my internet password, how do I advance past this?

I've got an early 2011 Macbook Pro running the latest OS, but this afternoon it decided to not start properly, and I was faced with the blinking folder of death. Having googled around the subject a bit, it seems the thing to do is boot and hold the option key, then do a few things to sort it if its sortable. However, its asking for my network, and the password. For some reason, it is completely rejecting the password, even though I know thats the correct one (I'm using it now for instance!).

So how do I move this forward? I'd rather not have to buy a new MBP, but its looking like it might be necessary at this stage, as I need a laptop for my work! I've tried to book into a London apple store, but there are no free slots at any of them.