Okay I beleive your referring to the modification for vbulletin which is not part of the supported software you purchased from our company.
We can not provide support for code mods only the photopost software.
I would suppose you have altered your code mods because I am familiar with the code mod your talking about since I wrote it. The query for the forumhome photos block most definately has the proper formatting to not show password protected photos.
Code:
Content visible to verified customers only.
notice where it says if you look at your plugin code the part where it says that category password field must be empty.