I was recently troubleshooting an issue with an iPhone connected to an Exchange account, where the user would receive a prompt to enter their Exchange password every morning.
I tried all the standard troubleshooting techniques, including deleting and re-adding the Exchange account on the iPhone. Through trial and error we determined that if the user clicked Cancel on the password prompt, it would still check email just fine. The user claimed they only got this password prompt first thing in the morning, but also remembers seeing it a couple of times late at night.
Ultimately I figured out that this user’s Active Directory account was set to not allow logins from 10pm-4am. This is configured on the server end by going to Properties on the user’s AD account, clicking the Accounts tab, and clicking the Logon Hours button.
Apparently, if an iPhone is connected with an Exchange account, and the associated AD user has limited login hours, the iPhone will bring up an Exchange password prompt when it can’t connect to the Exchange server. In this user’s case, this password prompt was actually opening at 10pm, but the majority of the time the user didn’t see it until the next morning.