That's the Password Manager.
In that box where you type in the password, there is a checkbox to have the Password Manager remember it, so you do not have to type it in each time.
Another item to look at, is in the Preferences. Go to Edit/Preferences/Privacy & Security. Under Private Data, if there is a checkmark in the box next to Saved Passwords, uncheck this box. If this is checked, SeaMonkey will correctly clear any saved passwords, including those for e-mail accounts (as I found out a while back).
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