The email or password contains invalid invalid characters.
Only letters (A-Z) and numbers (0-9) are allowed.
If you're storing passwords in ANY reversible format, you're a threat to every user's security. It's part of why I like OpenID: if your server is compromised, I'm not.
Either that or their backend software is incompetent (as well as the people that made it) and can't handle pattern-matching outside of [:alnum:] or can't store character values outside of [:alnum:]. It's the same reason that there are many sites that you can't use the 'md5 a single password against the site's domain name' trick because they limit password length to 8 or 16 characters (as if they are some sort of 'accepted industry standard').
Have you considered using base64 or some other encoding to shorten the string?
The problem being length. Human-readable (ascii-armored/whatever) hashes (md5/sha-1/sha-256) have standard lengths which are usually longer than the maximum size of the password fields.