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?
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.