Cannot log in with Apple ID after performing password reset

My wife forgot the password to her Apple ID account. Her Macbook Air (OS X Yosemite) restarted to install some updates. She has her user account set up through her Apple ID account.

Since she forgot the password she reset it from my laptop.

She can log in to iCloud and Apple ID with the new password, but cannot log in with the new password on the Air.

When she tries to log in she is greeted with this message:

"This account uses an iCloud password to log in. If you need to change the password, use another device to change it at appleid.apple.com."