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Electrum will only ask for password when access to the encrypted data: the master private key or seed are required.
When making a bitcoin transfer, Electrum still requires a password to sign. So I really need help.
That's what that line is all about.
Electrum will have to derive the required private key from the master private key to be able to sign a transaction.
Since the master private key is encrypted, you'll have to provide the password to gain access to it.