I was wondering about this too just now… rifled through the documentation a bit and couldn’t tell there either: http://codex.wordpress.org/Writing_Posts – this mentions making a post private by password protecting it, when really they’re two different functions.
As near as I can tell, password protected posts will show the post title, categories, and tags… and they’ll show a box asking for a password. This happens in the RSS and in the theme, at least in the theme I’ve got.
If a person isn’t logged in with proper credentials, they won’t even know a private post exists. From my testing, I can’t even find a tag I’ve associated with my private posts, unless I’m logged in as an Editor or Administrator. Authors, Contributors, and Subscribers don’t see the posts.
Can anyone confirm this?