As a rule of thumb, I always expect new software to have some bugs and/or design mistakes. The new "Forget This Site" feature in Firefox 3.5 is the latest case in point.
Here is an excerpt from Mozilla's Firefox 3.5 FAQ that explains the feature:
Q: What if I forget to enter Private Browsing mode and want Firefox to forget the website I just visited?
A: Firefox 3.5 includes a new feature Forget this Site where you can remove every trace of that site from your browserno questions asked! Open the History Sidebar from the View menu, select a website and then select Forget This Site from the right-click menu ... With Firefox 3.5 you have full control over what to delete and that information is gone for good ...
Except that it doesn't remove every trace of a web site. Not even close.
Let's assume you want to remove all traces of the fictional website called hidemepleeze.com.
You may find, as I did when testing this, that the History Sidebar has entries for hidemepleeze.com and entries for www.hidemepleeze.com. If you delete www.hidemepleeze.com, the entry for hidemepleeze.com remains. After deleting just the "www" entry, I checked the cookies stored by Firefox 3.5 (Tools -> Options -> Privacy -> Show Cookies button). There were no www.hidemepleeze.com cookies, but there were still hidemepleeze.com cookies. Mozilla needs to re-think the definition of a website.
Then I deleted hidemepleeze.com too. But, there still remained a record of the hidemepleeze.com site - in a Flash cookie.
I'm no expert on Flash cookies (the term refers to Adobe's Flash Player software, not to the Flash used in USB memory sticks), but as more people become aware of legacy browser cookies, companies that want to store stuff on your computer without your knowing about it have migrated to using Flash based storage.
The settings that govern how Flash stores data on your computer are available at the Adobe Flash Player Settings manager, a group of six web pages at macromedia.com.
My test website did not have a saved password, so I didn't test if the password was removed.
Not to make too big a deal of this. Firefox is still, in my opinion, the best web browser. But it points up a very important Defensive Computing tactic, never rush into the latest and greatest software. The risk of bugs, design flaws and/or software incompatibilty is too high.
If you really want private browsing, rather than deal with the new features for this in each web browser, look into the excellent Sandboxie program. It can revert all changes made by any program, not just a web browser. There is a free version and paid version, the free version is not missing much.