“Specified system domain user does not exist or the provided password is incorrect.”This issue occurs when attempting to change the password while logged in with same local SSO user. Only members of the Administrator group for the vCenter Single Sign-On domain can reset passwords.
To resolve this issue refer to following documentation:
https://techdocs.broadcom.com/us/en/vmware-cis/vsphere/vsphere/8-0/vsphere-authentication-8-0/vsphere-authentication-with-vcenter-single-sign-on-authentication/managing-users-and-groups-with-sso-authentication/change-your-vcenter-single-sign-on-password-authentication.html