iCloud sign-in asks for password of MacBook that's running my Fusion VM of OSX 10.11, then rejects the correct password. Fix?
This is a new authentication method. It really doesn’t have anything to do with your app or your VM - Apple is using another trusted device to prove you’re in control of the sign in request.
This all started around April 2017:

iPhone asks for Mac password (or Mac asks for iOS password)