diff --git a/wp-admin/edit-form-advanced.php b/wp-admin/edit-form-advanced.php
index c977df6324..ae212c7166 100644
--- a/wp-admin/edit-form-advanced.php
+++ b/wp-admin/edit-form-advanced.php
@@ -146,12 +146,13 @@ switch ( $post->post_status ) {
 <div class="misc-pub-section " id="visibility">
 <?php _e('Visibility:'); ?> <b><span id="post-visibility-display"><?php
 
-if ( !empty( $post->post_password ) ) {
-	$visibility = 'password';
-	$visibility_trans = __('Password protected');
-} elseif ( 'private' == $post->post_status ) {
+if ( 'private' == $post->post_status ) {
+	$post->post_password = '';
 	$visibility = 'private';
 	$visibility_trans = __('Private');
+} elseif ( !empty( $post->post_password ) ) {
+	$visibility = 'password';
+	$visibility_trans = __('Password protected');
 } elseif ( is_sticky( $post->ID ) ) {
 	$visibility = 'public';
 	$visibility_trans = __('Public, Sticky');
diff --git a/wp-admin/edit-page-form.php b/wp-admin/edit-page-form.php
index 4313e9c661..f4d98fe995 100644
--- a/wp-admin/edit-page-form.php
+++ b/wp-admin/edit-page-form.php
@@ -141,12 +141,13 @@ switch ( $post->post_status ) {
 <div class="misc-pub-section " id="visibility">
 <?php _e('Visibility:'); ?> <b><span id="post-visibility-display"><?php
 
-if ( !empty( $post->post_password ) ) {
-	$visibility = 'password';
-	$visibility_trans = __('Password protected');
-} elseif ( 'private' == $post->post_status ) {
+if ( 'private' == $post->post_status ) {
+	$post->post_password = '';
 	$visibility = 'private';
 	$visibility_trans = __('Private');
+} elseif ( !empty( $post->post_password ) ) {
+	$visibility = 'password';
+	$visibility_trans = __('Password protected');
 } else {
 	$visibility = 'public';
 	$visibility_trans = __('Public');
diff --git a/wp-admin/includes/template.php b/wp-admin/includes/template.php
index 219eefc2d9..d427389242 100644
--- a/wp-admin/includes/template.php
+++ b/wp-admin/includes/template.php
@@ -1011,8 +1011,10 @@ function inline_edit_row( $type ) {
 				<span class="input-text-wrap"><input type="text" name="post_password" class="inline-edit-password-input" value="" /></span>
 			</label>
 
+			<em style="margin:5px 10px 0 0" class="alignleft"><?php echo _c( '&ndash;OR&ndash;|Between password field and private checkbox on post quick edit interface' ); ?></em>
+
 			<label class="alignleft inline-edit-private">
-				<input type="checkbox" name="keep_private" value="private" <?php checked($post->post_status, 'private'); ?> />
+				<input type="checkbox" name="keep_private" value="private" />
 				<span class="checkbox-title"><?php echo $is_page ? __('Private page') : __('Private post'); ?></span>
 			</label>
 		</div>
@@ -3248,7 +3250,7 @@ function _post_states($post) {
 		$post_status = '';
 
 	if ( !empty($post->post_password) )
-		$post_states[] = __('Protected');
+		$post_states[] = __('Password protected');
 	if ( 'private' == $post->post_status && 'private' != $post_status )
 		$post_states[] = __('Private');
 	if ( 'draft' == $post->post_status && 'draft' != $post_status )
diff --git a/wp-admin/js/inline-edit-post.js b/wp-admin/js/inline-edit-post.js
index 3a19004dc9..88163504e8 100644
--- a/wp-admin/js/inline-edit-post.js
+++ b/wp-admin/js/inline-edit-post.js
@@ -21,6 +21,15 @@ inlineEditPost = {
 
 		$('a.cancel', bulkRow).click(function() { return inlineEditPost.revert(); });
 
+		$('#inline-edit .inline-edit-private input[value=private]').click( function(){
+			var pw = $('input.inline-edit-password-input');
+			if ( $(this).attr('checked') ) {
+				pw.val('').attr('disabled', 'disabled');
+			} else {
+				pw.attr('disabled', '');
+			}
+		});
+
 		// add events
 		t.addEvents(t.rows);
 
@@ -146,7 +155,10 @@ inlineEditPost = {
 		// handle the post status
 		var status = $('._status', rowData).text();
 		if ( status != 'future' ) $('select[name="_status"] option[value="future"]', editRow).remove();
-		if ( status == 'private' ) $('input[name="keep_private"]', editRow).attr("checked", "checked");
+		if ( status == 'private' ) {
+			$('input[name="keep_private"]', editRow).attr("checked", "checked");
+			$('input.inline-edit-password-input').val('').attr('disabled', 'disabled');
+		}
 
 		// remove the current page and children from the parent dropdown
 		var pageOpt = $('select[name="post_parent"] option[value="'+id+'"]', editRow);
diff --git a/wp-includes/post.php b/wp-includes/post.php
index 8e1451cbda..4df56bb462 100644
--- a/wp-includes/post.php
+++ b/wp-includes/post.php
@@ -1422,7 +1422,7 @@ function wp_insert_post($postarr = array(), $wp_error = false) {
 	else
 		$menu_order = 0;
 
-	if ( !isset($post_password) )
+	if ( !isset($post_password) || 'private' == $post_status )
 		$post_password = '';
 
 	if ( !in_array( $post_status, array( 'draft', 'pending' ) ) ) {
diff --git a/wp-includes/script-loader.php b/wp-includes/script-loader.php
index 2fe832046e..3d48841a0e 100644
--- a/wp-includes/script-loader.php
+++ b/wp-includes/script-loader.php
@@ -250,7 +250,7 @@ function wp_default_scripts( &$scripts ) {
 
 		$scripts->add( 'theme-preview', '/wp-admin/js/theme-preview.js', array( 'thickbox', 'jquery' ), '20080625' );
 
-		$scripts->add( 'inline-edit-post', '/wp-admin/js/inline-edit-post.js', array( 'jquery', 'jquery-form', 'suggest' ), '20081129' );
+		$scripts->add( 'inline-edit-post', '/wp-admin/js/inline-edit-post.js', array( 'jquery', 'jquery-form', 'suggest' ), '20081206' );
 		$scripts->localize( 'inline-edit-post', 'inlineEditL10n', array(
 			'error' => __('Error while saving the changes.'),
 			'ntdeltitle' => __('Remove From Bulk Edit'),