No working password manager in any 1.7-assembly.
Thanks for testing and confirming this.
Almost forgot how to get it working.
The 1.7a/a2 came without password support in GRE.
The updated variations use GRE without KM modifications,
with large xul.dll taken from other Mozilla browsers.
There is no problem with 1.7a2 program or plugins,
Password support works, if you compile a new GRE
with password support for K-Meleon.
I think it was part of wallet.dll/wallet.xpt.