I see that I have a cookie file in my home directory under _hgcookies:
# Netscape HTTP Cookie File
# http://www.netscape.com/newsref/std/cookie_spec.html
# This is a generated file! Do not edit.
fogbugz.accidentalhacker.com FALSE / FALSE DBID
fogbugz.accidentalhacker.com FALSE / FALSE fSetNewFogBugzAuthCookie 1
fogbugz.accidentalhacker.com FALSE / FALSE fbToken 6hsasdg0sdgh6qjfcd8pgZiqmv2
(Note: token value has been changed to protect the innocent)
If I do hg logout and try again, I get the same result. I also tried manually deleting the cookie file; it gets re-created. This happens for everyone who uses our Kiln instance, so it's probably not machine specific.