when my computer wakes up from hibernation or sleep, on entering the password Windows 8.1 keeps doing its fancy stuff on the front end, and then after a long pause it says that the password is wrong. It has been happening since I started using Windows live ID log into my user account i.e. for past month.

This is problem is really irritating. A cure to this problem saying to use local account is not welcome.

Hi,

Since this issue happened when starting from sleep or hibernation, I consider this issue can be caused by driver:

Please test the issue by starting computer in Safe mode with Networking, and let me know the results.

Then, please check following key value: HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Authentication\LogonUI\SessionData\2

Check the value data of LastLoggedOnProvider.

Then, please find the same name under HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Authentication\Credential Providers, see if the value data for the LastLoggedOnProvider is Password provider (This is the default Windows Credential provider).

If this credential provider is from third part, I suggest we change it back to default Windows Credential provider to check the results.

1.        Select IDs under HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Authentication\Credential Providers one by one.
2.        Find the one with value data: PasswordProvider
3.        Copy the id into LastLoggedOnProvider under

HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Authentication\LogonUI\SessionData\2

HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Authentication\LogonUI\SessionData\3

HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Authentication\LogonUI\SessionData\4

1.        Save changes and restart to check the issue.

Note: To change registry key may produce some dangers, please backup these registry keys. Any issue happened, import back to restore last settings.

If the issue still persists, please upload the event log into skydrive and post back the shared link for further research.