The newer version of the firmware has modified the button function as per RIM at the moment so it only locks the screen from being pressed but not password locked. You have to use the onscreen lock to password lock it. Until RIM decides to put the functionality back to the original, its going to remain this way.
oh i see....you wouldn't happen to know which version was the last one to have the function. i know it was .419 but i been running hybrids and im currently on .553 and don't remember which one still had it.