So here is another problem I have had for quite a while and just stumbled across an answer so I thought it might be worth sharing . My Gmail account started sending Spam emails to people so as you do, you change the password. So I changed it on the computer and now the phone has become disconnected and no password box in sight.
To fix this simply go to:
Settings > Applications > Manage Applications
Make sure all apps are listed by pressing Menu Button > Filter > All
Now select email and clear cache.
It will prompt for a new user name and password and will reconnect
Thanks to: http://groups.google.com/a/googleproductforums.com/forum/#!category-topic/gmail/android/nRC0Nxi57sg