maintain password value after failed login attempt
The password field doesn't use the "#default_value" property. This means that is not possible to pre fill the field with a default value as it is possible with a textfield field. As it is not possible to set a default value for the field, a password field is always shown empty.  

It is what I would expect, especially when a validation handler returns an error for the entered password. If the password is wrong, I don't see any reason to pre fill the field with what previously entered, considering that what the user sees is something similar to "•••••" (or a group of asterisks).