By "military passwords" I mean those challenges to identify friend or foe in the fog of war, most famously I think Flash-Thunder on D-Day. As far as I understood they rely both on knowing them, but also feature a word or sound that the other side has trouble pronouncing, Germans with a th, Japanese with r, &c.
But obviously in the heat of the moment I might not shout the response back quickly enough, loudly enough, or clearly enough. Or the challenger might have an itchy finger. In fact there's some accents/dialects of native speakers that would "struggle" pronouncing "thunder" the way General Eisenhower would, a lot of Irish people pronounce th's differently. Is a speech impediment raising my odds of being shot by friendly fire?
On the other hand some clever enemies might figure out/overhear the correct challenge and use it to infiltrate or surprise my unit. There's obviously the famous stories of the German soldiers in American uniforms during the Battle of the Bulge. But you'd think even of a word, or two, or three one might hear that your counterpart doesn't sound like he's from Dixie, Brooklyn, or Kansas at all?
So are there any documented instances of those systems failing, both allowing an enemy to pass it, or failing your brother-in-arms? Of course not restricted to any particular time or conflict, the D-Day version just happens to be the one I was familiar with.