The SqlDatSource Wizard needs the password to establish connection to the database so that you can use the Query Builder and easily set up your SqlDataSource. The password is part of the connection string and is required. It cannot be encrypted. Note that if you decide to use a shared connection string, in the report definitions will be stored only the name of the connection string. The real connection string that contains the password will be stored in the designer configuration file and/or in the configuration file of the application rendering the report. Thus, generally, it will not be accessible by the clients reading the reports.
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