Apparently the applications password is case sensitive in R12.
You can test using this script:
begin
if apps.fnd_user_pkg.validatelogin('<username>','<password>') then
dbms_output.put_line('ok');
else
dbms_output.put_line('failed');
end if;
end;
/
This is an issue for the xls4oracle tool o R12. A new release is on its way!!!
Updated 26-may-2010: New release 3.6.10.223 – fixed to handle R12 passwords.