Hi,
I phoned the German helpline but all the operators were busy so I hung up, and two minutes later they called me back! Wonderful.
He went through the same questions as you and decided the camera was faulty and that I should send it back.
Then, as a last effort we logged on to the the camera using the IP address, and under the Maintenance tab changed the password from blank to a new password. Then suddenly I could see the camera locally on my iPhone in mydlink Lite and under "remote" I was able to add it to my mydlink account! Now everything works just fine.
I do not know what the problem was - I have a French language version of mydlink Lite so maybe there is a bug? Also my router does not have WPS so I did the setup manually. Maybe if you can set up with WPS it does not give this password problem, but I am just guessing.
Thanks for the help and for giving me the motivation to keep going!
It's a good camera by the way.
Regards
Andrew