This is one of the very often faced error for job failure.
Exact error goes as follows:
Unable to start execution of step (reason: Error authenticating proxy , system error: Logon failure: unknown user name or bad password.). The step failed.
This happens when the secret word(password) you provided while creating a credential for a proxy has got expired. Exact scenario may be, you have used a domain account which enforces password expiration policy and you have changed you password. This happens because sql server resolves your changed password when you authentication mode is set to accept mixed mode, but the credentials which you have created does not accept this or resolve the change. Now you if you have to make this proxy work you need to delete the credential and again create it with new password and map to proxy. This sometime may again hit your jobs. So better way is to alter the credential and provide the new password. This can easily be achieved by below script by replacing the values according as per your needs:
Script:
USE [master]
GO
ALTER CREDENTIAL [ProxyCredentialsName] WITH IDENTITY = N’DOMAIN\ACCOUNTNAME’, SECRET = N’NewPasswordchanged’
GO
Manjunathcbhat's Blog 
You mean to say that we will get this error only when we use the mixed mode authentication? Shall we get the same error in Windows Authentication??
Hi Shubo. Here you may observer i am referring as domain account which means, windows authentication. And yes to your question you may encounter this in SQL login also if you change the password of SQL login as well
Yes! you are correct
So u mean to say we can encounter the same error in both the authentications? i mean in both Windows as well as SQL Auth???
Did not get your answer. Could you please be specific and let me know in which consequences we may get this error.Is it with Windows Auth or in mixed mode Auth?
You may get this error for both Windows Authentication account(Domain Account) and also for SQL Account if the password does not match to the password which you had provided during creating Credentials
But does mixed mode auth check for the domain password also?????
Yes offcourse it will. You do not provide password for Windows authentication that does not mean it will not check for password. It will but difference is you will not be pproviding password instead it will pick from AD
That means in Windows Auth mode it picks the password from AD but in mixed mode it checks both the AD password as well as SQL login credentials..is it?????