The Mobile Sync Client (simple_sync_android application provided with Oracle DMS) does not appear to save password correctly. When you select the checkbox to Save Password, my guess is that it stores an encrypted password but then does not return the decrypted version of the password. As a result login fails with the error
Encountered error: Server error, id = 2,001: "USER_INVALID in external auth; logon denied."
For details, check out the "My Experience" section at http://oracledms.blogspot.in/2012/08/sample-app-step-2-install-mobile-sync.html
Obvious workaround: Type in the password again and click Sync