The user guide says this.
"3. Enter a password for the locked room. To enter the room, players will need to submit this password.
You may wish to distribute this password by private message, instant messenger, or email.
You can assign a new password to a locked room by unlocking and then relocking the room. "
I'm guessing it must have been taken out at some point and time and the guide was never changed.
I thought possibly it was a gui glitch in which the entry boxes for this were not showing up or were appearing under the frame below it. I've seen this happen before so I thought that may be the case.
But if nobody else has it then it's probably been removed from the current version.
Thanks for confirming that it wasn't just me.