I've run into the same issue as Matthew. I can get this to work fine with an ASP:TextBox control, but as soon as I replace it with a RadTextBox, the password bullets appear on the screen, and then are immediately removed (it's almost like some client-side code is executed that clears the RadTextBox's value after a postback).
Here is what I'm trying to accomplish. I have a rather large user edit form that is full of server-side validation. On post back, everything is validated, and possible errors are sent back in a message to the user. The problem was that if a user had a problem with a field like email, the password fields were also reset on postback. The user would see "Email address is invalid", and they would correct that problem, but meanwhile not realize that on a separate tab, their password has been blanked out. The solution was to persist the password value in encrypted viewstate, and if a password value is set, create a mask, and send that value down to the asp:TextBox control. So, if a user types a password (like '12345'), it is saved in a viewstate variable, and the asp:TextBox was set to txtPassword.Attributes.Add("value","_____"). Then on subsequent postbacks, if the txtPassword value changes from the mask "_____", save the new password in viewstate, mask it, and update the mask on postback.
This has worked great, but I've since updated the entire form to use RadTextBox controls. Now, what worked fine in a ASP:TextBox does not work anymore in Telerik:RadTextBox. After a postback, the value that is masked and stored in the textbox is removed. It looks like it's there for a split second, and is likely being removed on the client after postback.
Any ideas how I can get this to work? In researching on the web, I've found that masking and persisting a password textbox through postbacks is a common enough request that I would hope Telerik would have a solution. For now, I'm using standard ASP:TextBox controls, which don't match the rest of the styled form.