Passwords in the file can be taken out really, really easily. Don't bother.
A DSO is an encrypted script file which cannot be read by people but still run by Blockland. However, Blockland uses a different version of the DSO format to other Torque games and Badspot has not included the compiling functions in the game to make files into DSOs - only he can make them, that's what allGameScripts.cs.dso and allGClientScripts.cs.dso are.