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Still dead in the water, it asks for a password and I am the administrator of the box and still it won't let me do anything. I have studio 8 installed if that helps.
I have the same problem.
I ended up by solving my issue by FTP-ing to the site and deleting the /_mm/ folder.
(Just deleting the contribute.xml file didn't do it.)
Strange, though. I never set an admin password for this site, so why did the software require it out of the box?
Yeah, this is a new (poorly designed) "feature" of contribute 4 that you get surprised with. Happened to me, too - and all of my clients who upgraded causing a massive problem (thanks Adobe!) - you can turn it off by going to Edit > Preferences > Security and uncheck requires password at startup. Of course...that is if you can get into Contribute.
It's nice how they don't give you the head's up that this new start up password exists when you upgrade. Fun! Makes me want to rush out and get CS3!!