The set session value server behavior is part of the eCart extension. When it comes to the value that you are attempting to insert now with the cookies toolkit how exactly are you setting this up? Are you just applying the set session cookie to the random password, or is there something else in play? Please post back with the specific steps you are taking that are getting you this error so that we can look into this further with you.
As for having multiple versions of DW installed at one time this is not a problem, I have a similar setup myself.