The server is looking for a password to be sent to it upon connection, and if it doesn't see one, or sees the wrong one, then it sends the bad password message.
To set the password to be accepted, you'll need to create an entry in the Options Dialog.
Here are the steps you need to take (ignore any that are already done)
1) Open mIRC
2) Press Alt+O to open the Options Dialog
3) In the Category list, select Connect - Servers
4) Click Add
5) Enter the information in the dialog box the shows. Please note that the port will default to 6667, so you'll have to change that to the proper port
6) Click Add
7) Click Connect to server (if you want to connect) or OK (if you just want to store the settings)
NOTE: The password must go in the box for the password, otherwise the server won't receive it in time.