I have configured autorestart within tws and it was working well for most of the week. This morning I saw a POPUP indicating "unknown or incorrect password", I did not screenshot it unfortunately. Needless to say, IBC was unable to login automatically. Does anyone have insight on how to fix this? Thank you.

The password is correct though, as soon as I closed tws & ibc and relaunched .bat, it logged in just fine.

When you say "this morning", what day of the week was that? If it is a Saturday or Sunday then you need to remember that during the weekend you must provide your credentials manually. Simply put, IB has made it impossible to run TWS/Gateway for multiple consecutive weeks without any re-authentication.