There's this bug: 
https://bugzilla.gnome.org/show_bug.cgi?id=680625
https://bugzilla.gnome.org/show_bug.cgi?id=597889
https://bugzilla.gnome.org/show_bug.cgi?id=689945

To summarize, when the network goes out of range and fails to reconnect it'd show the password dialog box (with the correct password already filled in) and stop trying to reconnect until the "Connect" button is pressed, or the network is selected again from the available networks list.

The correct behaviour would be to try and reconnect to the network (or listen until it comes into range again, and then automatically reconnect). And close the dialog box after reconnection, or not show that dialog at all in case the network just went out of range...

This is also discussed here:

https://askubuntu.com/questions/66891/how-to-stop-network-manager-from-continually-prompting-for-wireless-password/935044#935044

And here:

https://askubuntu.com/questions/19137/how-to-prevent-wireless-network-asking-password-when-briefly-out-of-range

It affects both my Lenove x200 (Ubuntu 16.04) and my new Desktop machine (with GC-WB867D-I wifi card, Ubuntu 17.04)