I have 2 dialup connections set up on my windows XP machine, when I start IE or any other net application I get the usual dialup connection window (exactly like the Win98 one) but the password is twice the length it should be. Remember Password is checked on both connections, and both remember the password incorrectly.
The XP system is networked to a Win98 machine which has had all it's dialup settings deleted and net apps redirected to the LAN.
Occasionally I get a different dialup window, with no password options just the ability to select ISP. When this happens, I can dial and connect to my ISP with no problem, so for some reason this window is remembering my passwords correctly.
Password boxes in XP use a random number of asterisks (or to be more precise, little black circles) to cover your password the number of dots is unrelated to the number of characters underneath so your password is probably correct.