Hooks into the key messages to a DevExpress TextEdit at a low level and replaces all characters with '*', maintaining a separate SecureString to store the actual password.

PasswordEdit.cs

/// <summary>
/// Hooks into the key messages at a low level and replaces all characters with '*', maintaining a separate SecureString to store the actual password.
/// </summary>
[UserRepositoryItem("Register")]
public sealed class RepositoryItemPasswordEdit : RepositoryItemTextEdit
{
    static RepositoryItemPasswordEdit()
    {
        Register();
    }

    public static void Register()
    {
        EditorRegistrationInfo.Default.Editors.Add(new EditorClassInfo("PasswordEdit",
            typeof(PasswordEdit), typeof(RepositoryItemPasswordEdit),
            typeof(TextEditViewInfo), new TextEditPainter(), true, null, typeof(TextEditAccessible)));
    }
    
    public override string EditorTypeName
    {
        get { return "PasswordEdit"; }
    }

    public RepositoryItemPasswordEdit()
    {
        this.UseSystemPasswordChar = true;
    }

    [DefaultValue(true)]
    public override bool UseSystemPasswordChar
    {
        get { return base.UseSystemPasswordChar; }
        set { base.UseSystemPasswordChar = value; }
    }

    [Browsable(false), EditorBrowsable(EditorBrowsableState.Never), Obsolete("", true)]
    new public MaskProperties Mask
    {
        get { return base.Mask; }
    }
}

/// <summary>
/// Hooks into the key messages at a low level and replaces all characters with '*', maintaining a separate SecureString to store the actual password.
/// </summary>
[DefaultBindingProperty("EditValue")]
public sealed class PasswordEdit : TextEdit
{
    private static readonly SecureString EmptySecureString;
    private SecureString secureString = new SecureString();
    
    public override string EditorTypeName
    {
        get { return "PasswordEdit"; }
    }
    
    static PasswordEdit()
    {
        EmptySecureString = new SecureString();
        EmptySecureString.MakeReadOnly();
        RepositoryItemPasswordEdit.Register();
    }
    
    [DesignerSerializationVisibility(DesignerSerializationVisibility.Content)]
    [DXCategory("Properties")]
    new public RepositoryItemPasswordEdit Properties
    {
        get { return (RepositoryItemPasswordEdit)base.Properties; }
    }

    protected override DXPopupMenu CreateMenu()
    {
        var r = base.CreateMenu();
        r.Items.RemoveByTag(StringId.TextEditMenuUndo);
        r.Items.RemoveByTag(StringId.TextEditMenuCut);
        r.Items.RemoveByTag(StringId.TextEditMenuCopy);
        r.Items.RemoveByTag(StringId.TextEditMenuPaste);
        return r;
    }


    private SecureString readonlyCopy;
    [DisplayName("EditValue (bindable)")]
    [Category("Data"), Bindable(true), DesignerSerializationVisibility(DesignerSerializationVisibility.Hidden)]
    new public SecureString EditValue
    {
        get
        {
            if (readonlyCopy == null)
            {
                if (secureString.Length == 0)
                {
                    readonlyCopy = EmptySecureString;
                }
                else
                {
                    var copy = secureString.Copy();
                    copy.MakeReadOnly();
                    readonlyCopy = copy;
                }
            }
            return readonlyCopy;
        }
        set
        {
            if (readonlyCopy == value) return;
            if (value == null || value.Length == 0)
            {
                secureString.Clear();
            }
            else
            {
                secureString.Dispose();
                secureString = value.Copy();
            }
            base.Text = new string('*', secureString.Length);
        }
    }

    [Browsable(false), Bindable(false), EditorBrowsable(EditorBrowsableState.Never), Obsolete("Use the EditValue property.", true), DesignerSerializationVisibility(DesignerSerializationVisibility.Hidden)]
    new public string Text
    {
        get { return base.Text; }
        set { base.Text = value; }
    }

    protected override TextBoxMaskBox CreateMaskBoxInstance()
    {
        return new PasswordEditMaskBox(this);
    }

    private sealed class PasswordEditMaskBox : TextBoxMaskBox
    {
        private const char DeleteChar = (char)0xFFFF;
        
        public PasswordEditMaskBox(TextEdit ownerEdit) : base(ownerEdit)
        {
        }

        protected override void WndProc(ref Message msg)
        {
            switch ((WM)msg.Msg)
            {
                case WM.CHAR:
                    if ((ModifierKeys & (Keys.Alt | Keys.Control)) == 0)
                    {
                        nextKey = (char)(long)msg.WParam;
                        if (nextKey != '\b') msg.WParam = (IntPtr)'*';
                        prevSelectionStart = ((TextBox)this).SelectionStart;
                        prevSelectionLength = ((TextBox)this).SelectionLength;
                    }
                    break;
                case WM.KEYDOWN:
                case WM.KEYUP:
                    var key = (Keys)msg.WParam;
                    if (key == Keys.Delete)
                    {
                        if ((WM)msg.Msg == WM.KEYDOWN)
                            goto case WM.CLEAR;
                    }
                    else switch (KeyMap.GetCharFromKeyData(key))
                    {
                        case '\0':
                        case '\b':
                            break;
                        default:
                            msg.WParam = (IntPtr)Keys.Multiply;
                            break;
                    }
                    break;
                case WM.CLEAR:
                    nextKey = DeleteChar;
                    prevSelectionStart = ((TextBox)this).SelectionStart;
                    prevSelectionLength = ((TextBox)this).SelectionLength;
                    break;
                case WM.CUT:
                case WM.COPY:
                case WM.PASTE:
                case WM.EM_UNDO:
                case WM.UNDO:
                    return;
                case WM.EM_CANUNDO:
                    msg.Result = IntPtr.Zero;
                    return;
            }
            base.WndProc(ref msg); // Apply the change in OnTextChanged
        }

        private char nextKey;
        private int prevSelectionStart;
        private int prevSelectionLength;
        protected override void OnTextChanged(EventArgs e)
        {
            // Wait till text changes to make sure the keystroke wasn't cancelled
            switch (nextKey)
            {
                case '\0':
                    break;
                case '\b':
                {
                    var secureString = ((PasswordEdit)this.OwnerEdit).secureString;
                    ((PasswordEdit)this.OwnerEdit).InvalidateReadonlyCopy();
                    if (prevSelectionLength != 0)
                    {
                        for (var i = 0; i < prevSelectionLength; i++)
                            secureString.RemoveAt(prevSelectionStart);
                    }
                    else
                    {
                        secureString.RemoveAt(prevSelectionStart - 1);
                    }
                    break;
                }
                case (char)0xFFFF: // Delete
                {
                    var secureString = ((PasswordEdit)this.OwnerEdit).secureString;
                    ((PasswordEdit)this.OwnerEdit).InvalidateReadonlyCopy();
                    if (prevSelectionLength != 0)
                    {
                        for (var i = 0; i < prevSelectionLength; i++)
                            secureString.RemoveAt(prevSelectionStart);
                    }
                    else
                    {
                        secureString.RemoveAt(prevSelectionStart);
                    }
                    break;
                }
                default:
                {
                    var secureString = ((PasswordEdit)this.OwnerEdit).secureString;
                    ((PasswordEdit)this.OwnerEdit).InvalidateReadonlyCopy();
                    if (prevSelectionLength != 0)
                    {
                        for (var i = 1; i < prevSelectionLength; i++)
                            secureString.RemoveAt(prevSelectionStart);
                        secureString.SetAt(prevSelectionStart, nextKey);
                    }
                    else
                    {
                        secureString.InsertAt(prevSelectionStart, nextKey);
                    }
                    break;
                }

            }
            nextKey = (char)0;
            base.OnTextChanged(e);
        }
    }

    private void InvalidateReadonlyCopy()
    {
        if (readonlyCopy == null) return;
        readonlyCopy.Dispose();
        readonlyCopy = null;
    }
}