Case: Thunderbird fails to connect to Gmail through IMAP for an existing or newly created account with an ‘incorrect password’ message. Same case for MS Outlook. The email address and password are correct. Using the same credentials on gmail.com works.
Google often rolls out new features and security settings for accounts. Solutions 1-2 address this.
Solutions to Similar Cases
Log in to the account and visit: https://accounts.google.com/DisplayUnlockCaptcha
Log in to the account and visit this link or go to Google Account Settings -> Security and enable Allow Less Secure Apps at the bottom.
If creating a new account, check if IMAP is enabled in the gmail settings for this account. Log in and follow this link or go to Gmail -> Settings -> Forwarding and POP/IMAP
For some frickin’ reason, IMAP access is not enabled by default anymore.
If everything else fails, request a new password by phone.
Basically you verify yourself again via phone. This message is there for a reason.