first, clear your head. then re-read the readme and the config file. No the server doesn't ask a listener for a password, but it asks the DSP for one (to keep other people from using your server to broadcast... logical isn't it?)
there are other passwords for more complex stations with dj and admin passwords. The (no source) bit will clear up when it connects
let's try some sort of visualisation.
there are 2 passwords, 1 required and 1 for more complex setups. The first (number one, I, uno, ein) password in the config file for the server is the one you want the DSP to use to connect to the server. This is what you would also use to check the server through the web interface.
DSP - Server
if pass = pass -- data flows to server.
if data -> data -- listener can listen in.
The other password can be setup by admins, and I use this term loosely, so they can somewhat control what happens with the server, while the other is for the DJ.
If this doesn't start to clear up any issues I would suggest you start drinking heavily.