It says the SD card is write protected even if it is in unlocked position. I'm trying to recover lost password by following the instructions here http://www.raspberrypi-spy.co.uk/2014/08/how-to-reset-a-forgotten-raspberry-pi-password/
The solution was rather funny, to say the least. The lock switch on SD adapter was not supposed to go all the way into unlock position, but be placed somewhere between 0.5mm and 2mm away from the unlock position towards the middle. Really unbelievable. I hope this saves someone some head scratching.