I'd love to help you, but obviously there isn't anything I can see, do or reproduce due to the nature of the situation, obviously it would be pretty stupid to post the password or send it to anyone you don't specificly know and trust.
When I go to it in IE and give it a incorrect password it looks like it's actualy checking and working, giving me the message "Login failed. Please try again."
From the source code I can see on your log in page it looks pretty simple and straight forward, I don't see any IE specific issues on that end, and like I said, everything on the publicly accessable end looks to be working.
Where you present the real problem or confusion is in saying sometimes it does work for you in FF, it might have been easier to solve without actualyy seeing it had you said it never works in any browser.
I even went to your home page to take a look at your codeing habits to see if I could gain any clues based on your style of work from that and it looks pretty clean, everything nicely indented and easy to read through, no abuse of trying to make everything Javascript.
The only thing that did immediately stand out to me though was something I had noticed in another cross browser problem here another person was having and unfortuneately never returned to say if what I suggested fixed the issue for them or not, and no one from Cube Cart has commented on what I had posted there, which I was in hopes of getting some type of confirmation, either from Cube Cart staff or the person who was having the problem. It's usualy safe to say when you give a person an answer that works you don't hear back from them. If it doesn't work though they are pretty quick to come back and tell you no that didn't fix my problem, so maybe it worked? or of course, maybe they decided I was a loon and went else where looking for answers?
I'm looking at your one Javascript file your calling on for that log in page "jslibrary.js" it doesn't look like you have edited anything at all in that file from the original, so again I'd suspect others to be reporting the same problems, how ever this one snip of the code found at the bottom continues to stand out to me as being a problem...
CODE
function submitDoc(formName) {
var obj;
if (obj=findObj(formName)!=null)
{
findObj(formName).submit();
}
else
{
alert('The form you are attempting to submit called \'' + formName + '\' couldn\'t be found. Please make sure the submitDoc function has the correct id and name.');
}
The reason it stands out to me is because it seems like I remember reading it being a security issue that was being addressed for cross site scripting problems where Microsoft had located problem signatures to this going all the way back to the development of IE 7 Beta2.
And that is the problem, since this if I remember correctly was an issue that was documented by Microsoft in the Beta 2 release of IE 7, since Beta 2 is no longer around I can't seem to locate the documentation I was thinking I read any longer, which would of answered this question once and for all. It's been driving me nuts, I was looking for that documentation the other day for the other persons issue, maybe my mind is just slipping and I'm completely off in my thinking, that's always possible.
A suggestion I would try, and your lucky that this could be a working fix for you and your client since this is for an admin log in only issue and not an issue for your regular customers. In IE add the domains "host424.ipowerweb.com" and "suddendeath.com" to your trusted sites and turn off all your security settings for them and see what happens.