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I should add to this that my blog index.php is hosted at
/blogs/ and wordpress is /blogs/wordpress/

The cookie for the password has a path of /blogs/wordpress/

When trying to use index.php from within /blogs/wordpress
the same behaviour occurs.

However, on a test server with wordpress and the primary
index.php in the same path/directory, the passwords on posts
function properly. There is no difference between the two
setups as far as applications and the code within index.php
goes. Only difference being the URI/URL to index.php and the
wordpress/ install itself.

Unfortunately, until the blog is completed and live, I
cannot post a link to it as it is not my own weblog.