Probably what doesn’t work is the interaction with the user input. There is a bug that might be related to it. Try setting the password with a static value and see if it works.
It seems to me to be a different problem than the above bug.
On the “Info” page, under “Attributes” it shows me the PASSWORD variable with the correct value. But in “Conf->CONTEXT” it shows in the PASSWORD a string (it looks like base64, but decoded is a binary) that is fixed, regardless of the password placed.
There were several issues with encrypted attributes solved in this issue, including encrypted attributes with user inputs. I think it covers your case. Resolved in release 6.4.1