You can highlight an entry in the drop down list and press the Delete key (on Mac: Shift+Delete) to remove it.

If the name stays the same and you only need to change (update) the stored password then fill the name in the login form and let Firefox fill the wrong password.
You may have to press the Tab key to fill the password field with the old password.
If you replace the wrong password with the new password then Firefox should offer to store the new password via the pop-up dialog from the key icon on the location bar (Firefox 3 versions show a bar at the top).

• Use the Remember Password bookmarklet on websites that use "autocomplete=off" to prevent Firefox from saving passwords.
  
• Verify that Firefox has stored the new password: Tools > Options > Security: Passwords: "Saved Passwords" > "Show Passwords"
  

If that didn't work then remove that name and password in the Password Manager and Firefox should offer to save the new password on the next visit or after reloading the login page.

See also:

• http://kb.mozillazine.org/Password_Manager
• http://kb.mozillazine.org/User_name_and_password_not_remembered (bookmarklet)
• http://kb.mozillazine.org/Deleting_autocomplete_entries

-> Tap ALT key or press F10 to show the Menu Bar

-> go to Tools Menu -> Options -> Security section -> click "Saved Passwords" button -> Saved Passwords window will open -> click "Show Passwords" button -> it will ask for your confirmation, click "Yes" button -> select the entry you want to Delete and click "Remove" button -> Now click "Hide Passwords" button -> click "Close" button on Saved Passwords window -> click OK on Options window -> Restart Firefox

Now Sign-in with CORRECT Username & Password

Check and tell if its working.

Thanks a lot, simple instructions - sorted !!!

Thanks for your help but sorted with other solution