We set “Customizer > Header > Account > Logged Out View > Account Action: Modal Login” on a client’s site.
When you click on the header’s Account link, it shows a modal box in which you enter your credentials. It’s not the Woocommerce Login Form but the original WordPress Login Form here. So, if credentials aren’t valid, you’re redirected to the WordPress login screen while wrong credentials should logically redirect to the WooCommerce Login/Registration Page when you are on a Woocommerce site.
It would be useful to add an option to “Account Action”, in addition to the three that are present (Link, Dropdown Menu, Modal Login) for WooCommerce stores so that the Woocommerce Login Form could be displayed instead of the original WP Login Form here (could be WooCommerce Modal Login for example).
In the Kadence Pro Addons list, we only activated “Header Addons” specially for this custom Account button feature and “WooCommerce Addons” for the “Sticky Add To Cart” bar… Unfortunately both have issues (see this topic for the sticky bar).