My apologies, it appears this was due to user-error.

For Yahoo messenger accounts, you must enter only the user-name, not the
full Yahoo ID.   e.g. For Yahoo ID "usern...@yahoo.com", it should be
entered as only "username" in Empathy.

Although this convention is highlighted as the example within the
Empathy Account setup for a Yahoo account, it's a different convention
to what is used in the Yahoo web messenger, which requests the Yahoo ID
be entered as "usern...@yahoo.com".


Thanks.

-- 
Under Ubuntu 10.10, Empathy 2.32.0.1 cannot sign into Yahoo messenger - 
"Authentication failed".
https://bugs.launchpad.net/bugs/668660
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