That's because you are trying to send the password from the database itself - which you cannot do because that is the encrypted representation of the password.
Typically, sites that have encryption go about emailing the password a different way. With a site that uses encryption, you actually want to generate a brand new password - then send it to the user with a note that they can log in with the new password and then change it to whatever they like and then you encrypt the newly generated password to store in the database (wither with SHA1 or MD5 depending on preference).
So on your email password page, you have someone enter their email - then you keep the lokup functionality to ensure there is a user with that email - then you could use Security Assist's random password generator and make like a 6 character random password. You would then create the universal email to go out with that new password. Next on your page would be a dataAssist single record update behavior to update the password of the user you just emailed. In the DataAssist wizard, you would go to the page where you assign values to the columns.... then select the password column and click the lightning bolt to add your randomly generated password from the session list... be sure to look down at the Format option - if you are using WebAssist's SHA1 encryption - you will then need to select the SHA1 formatting in the Format drop down to apply to your random password session variable.
Now when the person logs in, you must have the authentication check for encrypted passwords - which will compare the SHA1 formatted version of the password they enter to value that is stored in the database.