I get this exact same problem just as described in the initial post. Any updates?
Setup is like…
domain.com/1 (a full WP installation)
domain.com/2 (a full different installation with different prefix to database)
Seperate .htaccess files too. They are entirely separate installs.
Updating settings on #2 installation will lock you out of #1 and attempts to re-login will redirect you to #2. It does that basically for whichever was last updated.