If the device had a password, it may have also been encrypted. An encrypted 8700 took over four hours to wipe, and the 8700's processor is at least three times faster than any other Berry (except the 7130). Give it time.
If after a day it's still dead, see other threads about reviving a dead berry using Javaloader or JL_Cmdr.
You can't get rid of the password without updating the IT Policy. All of the above will NOT change the password requirement. To do that you need to change the IT Policy to not require it.
For info, go to http://blackberry.awardspace.com/