This is what the documentation says
(see here):
LoginPrompt can be set to True to force the system to get a username/password pair from the user. How these data are fetched from the used depends on the OnLogin event handler.
Not quite clear. From this, I am not sure if the connection component should provide some default login dialog, or it is up to programmer (ie. you) to provide one.
From this, I'd say that this property does nothing else but determines if OnLogin event fires or not. However, this does not seem useful, because you could always easily set OnLogin event to nil if you do not want it to fire.
Maybe you should report this as a bug — if nothing else, at least the documentation should be more clear.