In the releases view I have created a new release called 'Release1' and set the ShowPasswordDialog property to yes. If I perform a build from the releases view the password dialog is displayed and the setup.ini reflects this by setting ShowPasswordDialog=Y.
If I use IscmdBld.exe from the command line within a batch file and point it to the release e.g. Release1, ShowPasswordDialog=N thus the password dialog is not shown.
A quick test at this end seems to work; could you post the exact command you're running?
As a stab in the dark: the default release name is "Release 1" with a space between; if you pass "Release1" with no space to the -r switch, InstallShield creates a new release without the show-password-dialog setting.
