Try inserting the edge of a piece of paper into the crack around the lens assembly, where it meets the camera case, and moving it about a bit, then removing it. (The idea is to try to dislodge anything that might be jamming the camera lens.)

Or use compressed air (of the sort used for electronics, the filtered-air kind in a can, so as not to introduce further particulates) to blow into the crack around the lens assembly.

Also try removing the batteries, and leaving the camera on a (dry, non-humid, non-dusty) shelf for overnight. Then put the batteries back in and try the camera again.

What exact words does the camera use to ask for a password ?

How old is the camera? in months or years since you bought it.

Has the camera been dropped or otherwise subjected to mechanical shock(s) in its lifetime?
Has the camera been operated in or subjected to, temperatures below 32 degrees F (freezing point) or above about 100 degrees F ? Has it ever been subjected to a humidity higher than 85 % ?

Has the camera been operated in a gritty or sandy environment, such as a beach, a seaside, a construction site, or the like?

(I am sorry that I was not able to respond sooner - there were a few other things I had to take care of first.)

- I take it that the request for a password XXXXX up when you put a disc into the hard drive on your computer? so it is not a request for a password XXXXX the camera itself... I should have figured that out, but I had to ask. At present you don't need to get me the exact words or context of the request for a password, but it might be convenient sometime.

As for the problem with the lens - does it obstruct with operation in any way? is the camera producing any error message about it? If 'no' to both questions, then it may be no problem whatsoever, but perfectly normal operation I suspect. Let me know, on these two points, please - they could be crucial. Thanks.