If you want it to prompt everyone for a password, then I believe you just want to change this line to say if no password, then true.
From:
PHP Code:
if (!$password OR ($vbulletin->userinfo['permissions']['adminpermissions'] & $vbulletin->bf_ugp_adminpermissions['cancontrolpanel']) OR ($vbulletin->userinfo['permissions']['adminpermissions'] & $vbulletin->bf_ugp_adminpermissions['ismoderator']) OR can_moderate($forumid))
To:
PHP Code:
if (!$password)
Test it on your test site - I think it should work.