I tried to login to SMC by executing the following command from command line
# smc &
The output is a Java accessibility bridge which put me into an open toolbox. I am presented with Solaris Console Management Server: 1217.0.0.1 and prompted for username root and asked for a password. When I put in the root password, I get an error message as follows: either your username or password was incorrect. Enter a valid user name and password for the specified Solaris management Console Server and click ok.

Let me aslo add that the root password that I used to log in is the same one I supplied when prompted.

I'd appreciate any help I can get with this.. Thanks in advance

Solaris 10 on a Sparc box

The smc utility is owned by root. Prehaps you're logged in as a normal user, but supplying root's password. Although I haven't used smc for a long time, so I do not remember whether it asks for username as well. But if it asks, supply username as root and then root's password. Note, there's difference between your username plus root's password and root's username plus root's password. So make sure you use root plus root's passwd.
Also try to switch to root's account to check if password is ok.

Thank you so much Shivaa. I did actually log in as root. The default is: username root
password
I logged in as root from the console(terminal) and used the same root password when prompted. I am able to bring up the smc, but unable to do anything else because it prompts for username and password.

I tested it by login as root in my Solaris 10.5 system, and smc's running smoothly. (Note, since it's located in /usr/sbin/smc, so only root can invoke it). Anyway, I got no problem in launching it.
Well, what you can do on a terminal i.e. CLI with root user, same approach will work here in SMC i.e. in GUI. I mean, same permissions/privilages will work, whether it's CLI or GUI.
If you will go to: This computer > System configuration > Users, it will prompt you to enter username & password. There enter:

username: root (Although already username will be mentioned as root)
password: root's password

So it should work in your case also. Did you check root's password?

It is at the point of system configuration that the root password error is coming. I can not do any function in that window, be it disks, users, or projects. I am thinking I may have RBAC issues, but cannot remember if I ever assigned roles with that task.

See what response you get if you supply the root password at the system configuration prompt

On my side it's runnig ok. But in your case, now it doesn't seem an issue with root's password (hope u tested it on terminal), but I guess your smc windows is hung.. right? Then may be something's wrong with smc itself. Anyway, how are you launching it? Once set DISPLAY again and launch it, as:-
If it still do not work, then once reboot and try again.