You can get more verbose logging if you set log level to debug in log4net.config, but whether that actually would show anything relevant would depend on the debug logging statements in the code.
I've just tried steps to see if I could reproduce the problem but so far have not been able to. The only thing I found is that if I change the password format on purpose for a child site from the master site, login fails in the child site until the app is recycled by tocuhing web.config. This is due to the heavy caching of the MembershipProviders by the runtime though so not much I can do but document it. Changing password format on purpose should be a very very seldom event in most cases though so this should be sufficient.
I have not been able to produce the symptom you saw though which was the apparent change of password format not on purpose but just as a side effect of other sitesettings changes and with the dropdown disabled at the time. Its possible I'm just not replicating your environment or the steps you took correctly. If you can reproduce it on your dev machine or tell me any other things that could be factors in reproducing it please let me know.
I'll review the code for site settings updates now and try to think of any situations that could cause this.
Best,
Joe