If, when connecting to a database with sql server management studio and you select "remember password"... where and how is it saved?

I presume it is somehow encrypted using your windows login password?

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What version of windows, what version of SQL Studio? – JNK Sep 15 '10 at 14:23
Hi JNK, It's XP SP3 and SSMS 2005 – Alex Key Nov 23 '10 at 14:27
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It probably uses a technology called DPAPI. There's some info about it at http://msdn.microsoft.com/en-us/library/ms995355.aspx. Basically encryption is based on the login password but they keys can also be backed up. In a domain environment, automatic backup is probably enabled - relying on a very secure & trusted domain controller.

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