hg clone http://user:email@example.com/repo.hg
...Mercurial used to store the password in the paths for the repository, and (apparently) used to be able to hg pull without additional changes.
In recent versions of Mercurial, the password is not stored, so the hg pull fails. Adding the password to the file explicitly also reportedly does not work.
The easiest fix is probably to add an [auth] section to .hg/hgrc, per instructions like this: