I had the same problem today. I was just called as the ward clerk and I noted that logins were done by calling. So, in MLS system options I clicked the Remove button for the past First Counselor in the bishopric, leaving him with a Restore button.
Then, I deleted the First Counselor as username and put in the first counselor's name like jsmith2, for example. I then had him put in his password. We saved and exited MLS. I then had jsmith2 try to log into MLS. The login failed. The message was "that username is used by someone else" or something similar to that.
I realized that I should have put jsmith2 in as a new user, attempted to do that, and was rejected by MLS.
What can I do to correct this error and install jsmith2 into MLS with the correct rights for his calling as the first counselor in bishopric?