Comment 29 for bug 697197

This is not a libvirt bug. This is caused by a flaw in particular QEMU version you are using, which silently disables auth when the password is set to "". This bug was introduced in QEMU in this bogus commit

commit 52c18be9e99dabe295321153fda7fce9f76647ac
Author: Zachary Amsden <email address hidden>
Date: Thu Jul 30 00:15:01 2009 -1000

    When using stdio monitor and VNC display, one can set or clear a VNC password; this should set or turn off VNC authentication as well.