OK, (only) after starting with emacs -Q does the password prompt (and the focus) appear at the mini-buffer.

"Pedro J. V. Mendes" <pedro.mendes@ist.utl.pt> writes:

[Don't forget to CC the bug tracker address so that the entire
conversation gets tracked. Thanks.]

Hello, and happy Xmas!

I give you snapshot of a minimal session exposing the problem.

When I was typing the password, the characters were showing in
normal-face, and after pressing Enter they turned to bold-face, like
the previous "ssh" command.

Do you see at the bottom of the screen a minibuffer prompt that asks for
the password?  If you enter the password in that minibuffer prompt (not
in the shell buffer), it should replace characters with asterisks.  Make
sure you didn't accidentally switch from the minibuffer to the shell
buffer.

[Screenshot showing the problem, from the OP]

Hm, it looks like a regular "Password:" OpenSSH prompt that should
already be handled correctly, unless I'm missing something.  Does this
happen when you start Emacs as "emacs -Q" too?

After that both the "ssh" command and the password were recorded into
the history.

I hope this helps.