login should fail if u click on "Cancel" button even the 
user name & pwd are correct.so u can write this in ur 
testcase document. 
if the specification also says that  "login window should 
get closed on click of cancel" then u can also include it 
to the expected result.(this comes under GUI testing )

offcourse u have to write a testcase document for cancel
button too.becoz before writing testcase for a login window
u have to write testcase for cancel button..u have to check
d status of cancel button i.e. enable  R disable.
  i dnt think is it a right r wrong...if it is wrong plz dnt
scold me..k...

In this case the Test case will be :-

 1)on click the "Cancel" button it should reset the form(the 
 input data will be cleared) to re login and the cursor should  
 be reflected on the user ID field.