Its definitely a weird issue , are you sure you are not using a 2FA wallet thats asks you for the 2FA code instead of the password Itself ?
If you have the seed as you said then I suggest upgrading to the latest version (If you didn't already) restoring the wallet and adding another password instead. If the problem persists then open a github issue on Electrum repository.
My wallet was originally a 2FA wallet. But I changed my phone so I restore my wallet using seed just fine, since Electrum 2.6.4. And I have been using it with no problem at all, except I lost my 2FA verification. But now everything works but I can't send my bitcoin due to (a strange)incorrect password.
Thanks.
is it a standard wallet or multisig?
I think it's a standard wallet. What is a multisig? Thanks.