You need to research the true nature of the error. Login failure errors aren't going to tell you the problem, in fact I believe every login error (whether it be a bad password, account disabled, etc) will return you the same error number, and always State 1. This is by design...to keep people from obtaining too much information.
To find out the real reason for the error you need to dive into your SQL error logs. If you have access to those logs then you should see somewhere in there the real reason for the error. Example:
2012-08-02 00:02:00.34 Logon Error: 18456, Severity: 14, State: 8.
2012-08-02 00:02:00.34 Logon Login failed for user '<user name>'. [CLIENT: <ip address>]
The most common list of possible error states are:
2 and 5 - Invalid userid
6 - Attempt to use a Windows login name with SQL Authentication
7 - Login disabled and password mismatch
8- Password mismatch
9 - Invalid password
11 and 12 - Valid login but server access failure
13 - SQL Server service paused
18 - Change password required
Any errors outside this general list and you should call perform a healthy Google/Forums search and if that fails, contact Microsoft Support.
Never argue with an idiot; Theyll drag you down to their level and beat you with experience