Q: nothing happens after password entered when prompted

Thanks BDAqua.

I ended up ringing Apple support before your reply. We tried everything they could think of, recovery mode. reset password etc etc but when we did this I couldn't log into my account at all. In the end a senior supervisor spoke with me our last effort was to reinstall Lion with fingers crossed this would fix it & it did. They hadn't come across my problem before to the extent it went to.

Thoroughly recommend Applecare insurance where all else fails.