Note the lovely domain names sprinkled all over the popup, none related to yc.com. The iframe indeed points at news.ycombinator.com, and I have a HN cookie, so I have no idea why it shows the login form.
Not sure why it isn't working for you. Mine works and I never had to enter my password in the popup. I do have chrome automatically redirect http://news.ycombinator.com to https://news.ycombinator.com so that might be doing it.
