Notice that when you log in it requests the current password. Then it requests the new password twice. Make sure that you have those right and if it’s still giving you trouble if it’s new I would just destroy it and rebuild.

It was a space issue. As work arround rebooted via recovery option and free up some space via cat /dev/null > /path/to/file. Then either reset password or login as normal.

Thanks anyway!
Artur