This setting sets the method of encoding the password in XML. The password mode setting can be found in the Edit Site Parameters dialog (right click Site Parameters and select ..Edit Site). Click on the XMLRPC tab to see what the current setting is.
It is recommended to use Base64.
Note: Make sure you restart all of the p2000 services after making any changes
If you are having connection issues, try checking the Allow Any IP Address checkbox to see if that allows communication.