#acl tkikuchi:read,write,delete,revert All:read
#pragma comment-owner tkikuchi
#pragma page-filename DEV/versions/962
Ah, looks like this was the problem:

{{{
--- passwords.py        (revision 8159)
+++ passwords.py        (working copy)
@@ -97,7 +97,7 @@
     @staticmethod
     def check_response(challenge, response):
         # Get the salt from the challenge
-        challenge_bytes = decode(challenge)
+        challenge_bytes = decode(str(challenge))
         digest = challenge_bytes[:20]
         salt = challenge_bytes[20:]
         h = sha.new(response) 
}}}

Unicode or string ?