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I am posting this in case anyone else is experiencing a similar problem. This morning I have started seeing the dreaded password dialogue box in Outlook when attempting to access my primary IMAP account on BT Yahoo. I do not have a problem accessing a secondary IMAP account which has been transferred to BT Mail, nor do I have a problem accessing my BT Yahoo mail via POP or via the web. In other words, this seems a problem exclusive to my BT Yahoo IMAP account. This is not exactly the end of the world and I have simply switched my POP account for the IMAP account in my send/receive group in Outlook (which for non-Outlook users means I have disabled automatic mail checking for the IMAP account).
I discovered the problem email account was working fine on my other PC, so I re-entered the identical password when the password dialogue box popped up on the problem Outlook and, hey presto, it worked. Some may say I should have done that in the first place but, in my defence, on every other occasion I can recall, the my password dialogue box has popped up due to problems with the server which were always outside my control.