What version of Java are you running? Is it your browser that is asking for the username and password? What browser?
Sorry for the delay getting back to you:
1) Version: 1.4.2-beta
2) Java is asking for the pword, not the browser. It says "Checking for latest version..." in a background window and then in front of that is a window asking for username and password that says "User Authentication" and "server is requesting authentication for:"
Now, I am behind a proxy server so I'm wondering if that's the problem.