A feature of Xmarks MAY be causing your password problem somehow. I don't use it myself so I can't be sure but disabling or removing it may be worth a shot to see it this is causing your password issue.
Quoted from XMarks info ...
Secure Password Sync
Xmarks can securely sync your passwords across all your computers
Secure Password Sync is an optional feature that lets you keep your saved passwords in sync between your computers. Save your passwords at work and have them automatically available on your computer when you get home!
Our Password Sync feature is only available in Firefox 3.
How it works
Password Synchronization works silently in the background to make sure that your passwords are the same on all your computers. If you add, remove or update a password on one computer, Xmarks will make sure that your change will automatically be made on all your other computers as well. It works in a similar manner to bookmark synchronization with two major differences:
- Password Synchronization is completely optional and is turned off by default. Xmarks will ignore your passwords until you decide to synchronize them.
- Password Sycnhronization encrypts your passwords using a secret PIN of your choosing before they ever leave your computer. This ensures that nobody but you, not even Xmarks, can gain access to your passwords. You can learn more about encrption and security below