When I type my current password, and let the new password as empty, on desktop, Electrum gives me this
"Password is disabled, this wallet is not protected".
And I did not believe that what you said, when a wallet is encrypted, it is encrypted forever, I tried to open it again, in Electrum desktop, it default opens a latest wallet I opened before. Hence, it opened the emptied-password wallet without any typing a password step.
I see it becomes a no password wallet, and it no longer is encrypted.
To make a post about mobile Electrum, be using mobile Electrum also. Desktop and mobile Electrum are not totally the same in functionality just as hosseinimr93 posted.
I think if OP wants, OP can delete that encrypted watch only wallet, and create a new one without a password.
On mobile Electrum, you need to input at least six characters before you will be able to finish setting up the wallet. If not, the 'fiinsh' button or what we can call it will be in grey and remain not clickable.