The userloginbar.module line 73

$output = '<div id="user-login-form">'. $output .'</div>';

The Form contained within this code already has id="user-login-form", so wrapping it with a DIV with the same ID causes a validation error.

I changed this to:

$output = '<div id="user-login-form-container">'. $output .'</div>';

I'm not 100% sure if it works this way with only Drupal base + userloginbar, but it seems likely.