When I add a new external Mercurial repository in Diffusion, I get the following Initialization Error :

Pull of "TESTA" failed: Command failed with error #255! COMMAND hg pull -u STDOUT pulling from https://xxxxx@<repository url> STDERR abort: http authorization required for https://<repository url>

It appears that Diffusion is not providing the credentials to Mercurial like it is done in the clone step. Mercurial stores the username in its .hg/hgrc file, but not the password.