have you checked the following document under "Using Web Services". There you can find information about the settings in the Primavera Configuration. Just check here if the settings for the encryption are correct.
I followed the mentioned above document while installing and configuring P6 and PRA. When I try to import projects it ask for user name and password. On giving user name and password as "admin". it shows the mentioned error.
Please check login user is case sensitive.
In PRA user names are case sensitive.
Also check configuration details once.
Query select * from users against P6 database.