A website to be penalized?

No. This is a common myth that is untrue. If it were true you could get your competitor penalized or banned by using automated SEO software to resubmit their website every 60 seconds. Naturally this does not happen (nor should it).

Some webmasters will try to say that Google says in their guidelines that you shouldnt use automated software like Web Position Gold. The reason for this is that most of these tools scrape Googles SERPs to find your sites ranking information. This is in violation of Googles terms of service. Software that uses Googles API is acceptable for querying their servers. Also, if you constantly use SEO software to query a search engines servers you might find that they ban your IP address to prevent you from using their resources any further. However, this has no effect on your web pages rankings.

Can search engines see password protected pages?

Search engines are not different from regular users in most ways. They cannot go anywhere that a regular user cannot go. If you have a password protected area of your website that cannot be accessed without a login and password then the search engines cannot see it.

Which is better for SEO: text links or graphical links?

Text links are better for SEO. Text links can contain the anchor text that your page wishes to rank well for and that is an important factor in all three search engines, especially Google. Image links are still valuable but do have less benefits compared to text links. This is true despite image tags having the ALT attribute available. The ALT attribute can contain keywords but thanks to keyword stuffing they now are virtually worthless. (You should be using your ALT attributes for usability and accessibility and not SEO anyway).