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I have an Excel spreadsheet in a SP library that we'd like to use in an Excel web part. However, the spreadsheet wouldn't load in the web part/web app, and would only load externally with Excel. Upon my further investigation, I figured out that someone has been password-protecting the worksheet. This action has apparently made the file un-viewable within the web part. Can someone confirm that password protecting will do this? And, is there any way of getting around this (other than removing the password protection)?

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That's correct, Excel Online (be it via SPO, WAC, or OOS) will not allow you to open password protected files (be it the workbook or one or more sheets) in the browser.

There is a good description of the limitations/differences on the article Differences between using a workbook in the browser and in Excel.

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