Use Show Custom Dialog script step and a global field. Your 'Show Input Field1' would point to a global field and you would check 'use password character' and type the label. Then continue your script using the global value. Be sure to clear the global when done using it. It might look like:
Show Custom Dialog [ "Do you wish to Send Mail?" ; YES ; NO ; Data::global password ] ... with label "Enter mail password"
If [ Get ( LastMessageChoice ) = 2 // user selects NO ]
... continue your Send Mail script here and then add last script step of:
Set Field [ data::global password ; "" ]