We are working on some password problems now. If you can upload a sample project showing the problem or tell us how to see it in one of our samples, we can verify we have it corrected. If you do this, also please mention what version of the library you are using.
From your description, I tink you might be able to handle the CurrentCellDrawDisplayText event and make sure that *''s are drawn.
private void gridDataBoundGrid1_DrawCellDisplayText(object sender, GridDrawCellDisplayTextEventArgs e)
{
if(e.Style.CellType == "OriginalTextBox" && e.Style.PasswordChar == ''*'' && e.DisplayText.Length > 0)
{
e.DisplayText = new string(''*'', e.DisplayText.Length);
}
}