I had a similar problem with an used 7960G phone (company attempt at saving a few bucks). I recently upgraded my call manager to 7.1.5 and for the most part all the phone updated successfully with the new firmware, however I had a 7960G that displayed the auth failed message as you mentioned...
I run a call manager express for our toyko branch office. You can do it thru the gui or thru the command line off the router.
In the gui, log on with the admin password and mouse over configure. You can see there are options one of them is "Users".
From there you can see "add" and probably can...
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