I can confirm the bug! I had the same problem when upgrading from 12.04
to 14.04. Thankfully the --unrestricted option helped.

Please put the bug on high priority because users cannot boot anymore
because the password might be confidential (known only by
administrators) or users may have forgotten their password (set a long
time ago).

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https://bugs.launchpad.net/bugs/1311302

Title:
  GRUB2 asks for password when booting

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