I would have expected that to be a tooltip that describes what a password is, not a reset link.

You're right. In fact, the number one lesson I've learned designing websites is that any time you're sure that users will understand what you mean, they absolutely will not. That's the one tip from this article that I completely disagree with.

Agreed. So much of making things easy for the user is sticking to convention and giving them what they expect to see.

I think most places use the "Forgot Password" link now so I think most people come to expect it. I know I would.

Yeah, I think at the very least this would be in addition to a "Forgot Password" link instead of replacing it. My favorite software seems to read my mind by supporting multiple ways of doing things, including whichever way I expect. But I like the idea of putting an extra link close to the field itself. Maybe "Password: (_Forgot?_)"

Agreed, that was an odd one (I've never even seen a site that does that). Other than that everything looked good though.

The way that I've always handled this is to only show the "Forgot Password" link after a login attempt fails.

Maybe that's unfair; expecting a user to attempt to login even if they're not sure of their details, but it always seemed reasonable enough to me.

That's not intuitive. When I go to a site I know if I remember the password or not. If I have no clue what the password could be I won't even attempt to login. If I don't see the "forgot password" link I would assume the site doesn't have that feature and leave.

Agreed -- particularly because the site may have some kind of lockout feature if I fail too many attempts, there's no chance I'll waste one just to see if there's a forgot password link on the failure screen.

I like sites that make the "Forgot Password" link much more visible after a failed login.

One of the issues with a "forgot password" link is that it's visual clutter. Could only have the link show if the user has moused over the form area?