I signed up with a password that had the special characters ">" and "]". There was nothing to indicate that this was a bad idea, no errors, warnings, or info on the password field to indicate a problem. In fact, I could login and logout without problems. However, when I tried to login to this forum I was denied (can't remember the exact error message). Guessing that the problem was the password, I went to change it in the profile edit page. But everytime I tried to change the password, I got back an error "Invalid Password" message. So in the end I had to use the "forgot my password" link to change the password.
After changing the password to one with only alpha-numeric characters, I am (obviously) able to login to the forum. I've yet to try to change the password again, but I suspect that will work as well.
I noticed that there have been password problems before (http://www.everytrail.com/forum/viewtopic.php?f=4&t=2317), and while perhaps related, is different.
At a minimum users should be warned about the use of non-alpha-numeric characters. And I think that programmatically limiting characters to alpha-numeric is an acceptable solution.