ok i figured it out with a little help from BlackBerry support.
It does this because content protection is enabled. I saw this in the other thread but couldnt figure out why it it used to work.
Apparently service pack 3 hotfix 4 enables this and there is no work around for it.
If they forget their password the only way to fix it is to wipe the handheld which will cause the blackberry to lose all its address info.