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I have the exact same issue:

Running OF 1.10.3 on OSX 10.8.2 on a latest gen MacBook Air.

This is the first time I have tried to use OF since upgrading to 10.8.2 from 10.8.1. I get the same issue, dialog box for the Sync server keeps popping up. Used the same credentials to log into the website, no problems there.

How do I fix this?