Is it asking for a database password or a User anem and Pawword (ULS)?
If I rememebr correctly, you must remove a database password before you can convert. If I rememebr correctly, you can still import the object after entering the databse password.
If the databse is using User Level Security (asking for user name and password) ithen the databse can only be converted to Jet 4 (Access 2000/2002/20003) format. The new ACE database engine that handles the 2007/2010 foramt (.accdb) does not support User Level Security.
Have you tried unint he Jet Comp 4 utiliy to compact the databae from Jet 3 to Jet 4 (Access 2000/2002/2003)?