@Milhouz I had a similar situation and it took a while to find a resolution.  If you are still having trouble, I explained everything in this thread.  To sum up, here is what fixed it for me. 

• Remove the device from Home Assistant (three dots -> Delete) 
• Factory reset the device (hold down reset button for 5 seconds)
• Re-add the device to the network using TP-Link app
• Restart Home Assistant

After you restart Home Assistant, it should find the power strip and want to re-add it with the usual local connection rather than asking for cloud credentials.  HA should recognize the device and reassociate all your existing automations back to it.  

Hopefully this helps.  

  @Milhouz just ran in to the same exact issue and error message tonight.

1) ignore the discovered device

2) go to the TP-Link Smart Home configured integration

3) select the blue "Add Entry" and enter the device IP address (may need to go through your router to obtain this).

4) it will prompt you to assign the plug(s) to an area. 

  @TerminalVeloc 

Thank you TV! This worked for me. I don't think I would have ever thought of adding the IP manually. I very much appreciate you sharing your solution.

  @Milhouz I'm getting a similar issue. I already tried everything and nothing has worked so far, already tried:

1. Toggle off and on the third party compatibility in the KASA App and Tapo App
2. Changing my password from the TP-Link account ID 
3. Factory resetting the power strips and trying to add them from scratch to Home Assistant
4. Sharing the devices on Tapo App to a paralell account and try to authenticate with the paralell account
5. Assigning a dedicated IP address to the devices on my modem

In all cases I'm getting an error that says something like:

"Unable to authenticate: Device response did not match our challenge on ip 192.168.100.xx, check that your e-mail and password (both case-sensitive) are correct."

Obviously, I'm sure that my password and email are both correct. It used to work before and with the firmware updated stopped working, I did not find a way to downgrade my firmware version to rollback the issue.

Any other advice would be appreciated as I used to use these power strips a lot through Home Assistant and used to work seamlessly.

Thanks in advance!

  @Juan1591  I am 99% sure it is a firmware bug in the HS300.  All of my other 31 TP-Link/Kasa devices work fine except this one power strip after the firmware update.  I am not sure where else to report it.