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I used stored host parameters, so login was the same except for adding encryption. Apparently it's a (Yahoo) server problem, as later attempts with CyberDuck didn't work either. Don't know why it worked the first time, unless CD didn't pick up the TLS flag the first time. Yahoo Small Business has in...

Unencrypted FTP works OK, but when I attempt to use Explicit FTP over TLS, I get the 530 Login authentication failed.
I installed Cyberduck, imported the same site parameters from Filezilla and it worked OK.
It appears that Filezilla 3.6.0 on Windows 7 has a problem with encrypted connections.