Recently when I tried to add my SharePoint Online (Office 365) site in SharePoint Designer 2013, the login page would repeatedly give the error “the user id or password is incorrect”.
the user id or password is incorrect
I tried both with my domain account and onmicrosoft.com account and was making sure I chose “Work account” when prompted and still it didn’t work.
Then I realised that the multi factor authentication has been enabled recently.
Use “App Password” in SharePoint Designer login page when multi factor authentication is enabled.
So I created an app password and tried logging in and it worked.
The web based login page rendered within the designer’s doesn’t highlight or warn you if you are using multi factored authentication or app specific password
You can learn more about creating the app password here.