Recently, I developed a version of a textbox that uses the SecureString class for its internal storage, called the SecurePasswordTextBox (can be downloaded here http://www.theglavs.com/DownloadItem.aspx?FileID=46 ). Its actually been used in a webcast by a guy called Dan Sellers in MSDN Canada. Check out the post here ( http://blogs.msdn.com/dansellers/archive/2006/03/08/546679.aspx ).
The webcast itself can be viewed here ( https://www.livemeeting.com/cc/msevents/view?id=msft021506jd&pw=SXCR2G45 ).
Note: The SecurePasswordTextBox is still a bit raw and ha some issues. Now that I have submitted the las chapter of my book, I will endeavor to fix those issues and get out a much better, more robust version.