Facing the same problem on a fresh 16.10 installation, experienced it
first while trying to install VLC through software centre. Ubuntu SSO
GUI didn't log me in, I tried a workaround using Terminal:

~$ sudo snap login <email>
[sudo] password for abhishek: 
Login successful
abhishek@kabhishek:~/Documents$ sudo apt-get install vlc

Only the GUI SSO option doesn't authenticate.

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  Can't auth against U1 in g-s

Status in gnome-software package in Ubuntu:
  Fix Committed
Status in gnome-software source package in Xenial:
Status in gnome-software source package in Yakkety:
  Fix Committed

Bug description:
  Authentication using Ubuntu One credentials to install/remove snaps always  
fails. This is due to a behaviour change in snapd (no longer accepts login 
requests from non-root users). Existing credentials continue to work.

  [Test Case]
  1. Delete any existing credentials by deleting passwords marked 
"com.ubuntu.UbuntuOne.GnomeSoftware" using Seahorse.
  2. Start GNOME Software
  3. Search for a snap (e.g. "moon-buggy")
  4. Install Snap
  5. Enter Ubuntu One credentials when prompted

  Observed result:
  Dialog says "Incorrect email or password".

  Expected result:
  Authentication completes and the snap is installed.

  [Regression Potential]
  The solution is to use a new D-Bus service (snapd-login-service) and new 
library (snapd-glib) to get the Macaroon from snapd. This has some risk of 
introducing new bugs. The change is minimised (other snapd code paths 
unchanged) and the alternative is login to be impossible.

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