There is if there are subfolders. Is the fact that pw protected parent folders expand even if the wrong password is provided something you have control over, or is this a side effect of the password being set directly on the folder? Also, do you have control over thumbnail previews being shown for pw protected folders? Although unauthorized people will not get access to the pictures (except a thumbnail here and there as mentioned above) it would look and feel more robust.
First of all, I do understand where you are coming from and why you want this. However, as it currently stands, Imagevue passwords are set uniquely for folders. What happens if someone tries to access a subfolder directly for example if a password has not been set on it? Imagevue would need to start checking parent folders to see if there is a password set. 1up -> password no? -> 2up password no? -> 3up password no? It would need to apply this process on all folders before they load, also non-protected ones of course, just to check if there is a parent folder somewhere that has a password set.
The menu itself loads all your folders also the passworded ones ... How else would a user be able to click a password-protected folder? If we were to hide subfolders of a password protected folder, it would require re-loading XML and re-creating the menu after
the user has entered the password for a parent folder. Technically, the passwords are not related to the menu at all ... passwords are requested when a folder is being called to load the content of the folder (if the folder has any content of course, and if there is a password set). The menu structure is created before regardless of this, because all items are displayed and clickable, but may of course require password.
Imagevue does not show preview-image from inside a passworded-folder ... It would show for a folder that is inside another passworded folder though. This currently all hangs together with the fact that passwords currently work uniquely on folder, and cannot be used correctly for password-protecting a group of folders with a parent folder.
As mentioned, I understand why you want this functionality ... However, there are some technical and logical issues that need to be solved before it works this way in a future update.