The joke is that he set the password to the same thing he thought it was to begin with — the same password the site said was incorrect, it's now saying was in fact his old password.

I forget where, but this has happened to me before. I thiiiink the logic was that it compares to your last 3 passwords, not just the most recent one. So if I had the password "hunter2", then changed it to "swordfish", then later forgot that and tried to log in with "hunter2", this is what would happen.

I've also had similar but completely inexplicable experiences with my cell phone provider, who shall remain nameless. My best guess is that my special characters (still ASCII but not alphanumeric) broke their poor lil database. It wouldn't accept anything until I set a strictly alphanumeric password.