This does sound like a bug, but not something we'd classify as a security vulnerability. Flipping some labels around in hopes that the right people can find it and take a look.

Is this related to Incognito at all?

In step #3, by opening a settings page, you switch to the regular mode. Can you please confirm that this is not reproducible without steps #1 and #2, i.e. without opening an Incognito window? 

Apologies for the belated input here. This issue can also be reproduced if one runs a second instance of Chrome. Specifically I can get the same lockout using an instance of PortableChrome on Windows. Please advise if more information required.

Thank you for providing more feedback. Adding the requester to the cc list.

For more details visit https://www.chromium.org/issue-tracking/autotriage - Your friendly Sheriffbot

Thanks for more details in #6!

With a colleague (dvadym@) we tried to reproduce on a Win machine, and on that particular machine this issue did not occur. It was a desktop machine with normal monitor, Windows 10 version 1709, Chrome stable 69.0.3497.100.

Could you please share your Windows 10 version (4-digit number displayed in the About Windows dialog)? Do you have a touch screen on your device?

I am adding wfh@ in Cc just in case they have any insights or suggestions for what to try. wfh@ contributed to chrome/browser/password_manager/password_manager_util_win.cc which handles the reauth dialog and is an expert on Windows.

No reply for multiple weeks.