Michael,
The issue isn't with JFBConnect at all, the JFBConnect Authentication plugin is simply ordered 'last' (highest number) in the Plugin Manager. Because of that, all authentication failures look like they are coming from JFBConnect. So, even if a user simply enters a bad Joomla username/password, it will look like JFBConnect denied the user.
If you switch the authentication ordering so Joomla is last, the same amount of errors will show, but they'll all look to come from the Joomla login system.
It's a silly bug on Joomla's part, and not something we can fix.
I hope that makes sense,
Alex