you did pretty well to get past level 2 so quickly
level 3 is where a little bit of actual 'hacking' comes in, since the first 2 were just exercises in logic.
Okay, a hint for level 3 .... hrmm... I don't really know how to word this without giving the whole thing away.
Try to think about where the password would be stored, given the fact that each level of the game has its own directory on the server. Also have a look at the source code and take a close look at where the "submit" button submits the password to.