This issue has been discussed on the forum various times before and is related to bubba-album. Don't remember the specifics, but you can use the search button in the top of this page to find more info.
the point is, once you set a root passwd and delete it, theres still a passwd , and you need to run the mysql statement with the -p option (which the updater does not do). Fully removing a passwd for root is not trivial for obvious reasons.
using a ~/.my.cnf seems to most logical solution *if* the updater reads this file.