The same problem:
Reading application configuration data...
...
0% Creating staging directory
5% Scanning for jsp files.
20% Scanning files on local disk.
25% Scanned 250 files.
28% Initiating update.
Email: *[email protected]
Password for *[email protected]:

java.lang.RuntimeException: Bad authentication response: 500 Internal
Server Error
Unable to update app: Bad authentication response: 500 Internal Server
Error
Please see the logs [/tmp/appcfg4861489851018090468.log] for further
information.

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