I assume that you have the minimum password strength set to 8 for this ID, and that you are trying to set a password that is eight characters long. The problem is that Notes is looking for a "password strength" of 8, not a length of 8. Notes has a mysterious process for determining password strength, which is not exactly the same as the length of the password. For example "password" does not have a password strength of 8, but PassWerd might. Just try using some better passwords and it should work.
This was first published in July 2003