cipher - Crack the Terrorist's Password!

You work for a secret organization, and recently the personal data of a terrorist leader has fallen into your hands. This would be great news, except for the fact that all the files are locked with a password. You know that this particular terrorist organization tends to implement a "three-strike" rule - after three failed attempts to enter the password, the data corrupts itself and is no longer usable. Luckily, the organization is as forgetful as it is crafty, so they've provided a hint on the password screen. The hint reads:

Hint 1: BFplmNVNbACLAMlrBgmDSllV iSTjfJsehRTgsRtM

Being a master codebreaker, you immediately open up QuipQiup and plug in the code. You take the result (NEw loGYGnPULPOliNs oF AllY HaD be Back I D saId O) and enter it as the password - no luck. The password rejects, and another hint is presented.

Hint 2: A failed attempt means you've either forgotten the password, or you're trying to hack it. Luckily, I've decided to play fair. Remember that it would be wise to pay close attention to the capitals.

Capitals! Of course! Heading back to QuipQiup, you remove each lowercase letter and solve it once again. You take your new result (NG TO THE CHINKS OF PURPRI) enter is as the password. Again, no luck - the password is rejected. This time, instead of a hint popping up on your screen, a warning message displays.

WARNING: You have one attempt remaining before the data corrupts. Remember, this data is a matter of life and death! Use your last guess wisely...

Can you crack the code and gain access to the data, or will you fail your third guess and render the data useless?

EDIT: First hint!

After some time with no results, you begin to focus on one aspect of the clue. Close attention to the capitals...close attention to the capitals...but what does it mean? Suddenly, something clicks with you. The terrorist leader said he's decided to play fair, but certainly not THAT fair! Either the capitals clue is a red herring, or there's more to the word than initially meets the eye...

And a QoL hint as well!

Everything outside the blocked text is just flavor. If you're trying to solve the puzzle, pay no attention to the QuipQiup results. It will only make you more confused.

EDIT: Second hint!

You don't have to be a secret agent/genius/master codebreaker to realize that the warning about life and death is some sort of hint (though it certainly helps). After many, many, many minutes of pondering the hint, however, you just can't figure out how it could possibly be used in tandem with the hint about capitals...

EDIT: Third hint:

As you stare at the letters, fruitlessly trying to forge them into something useful, your eyes begin to glaze and the letters all start blending together. Uh-oh. You try to blink it off, but to no avail. Perhaps what you need is a DiFfErEnT pOiNt Of ViEw...

EDIT: Fourth hint:

17 days. For 17 days, you've sat in your apartment, mindlessly toiling about in an attempt to discover the password. Your beard is overgrown. Your eyes are sagging. You're tired, hungry, cold, and alone.
But your organization needs you. So you press on. "Another angle...another angle..." And suddenly, it clicks. The initial text is only the first step in this process, and it doesn't require any software to convert at all. No, this isn't part of any typical cipher...it will, however, require some research. Better get started.

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6/11/2015 Update: Hey, guys! I've opened a bounty on this puzzle as well as my other unanswered puzzle as a way of saying thanks for the bounty you helped me earn on this excellent puzzle. As such, I want this puzzle to be solved - my bounty shan't go to waste! If there are any questions I can answer to confirm whether or not you're going in the right direction, please don't hesitate to ask them in the comments. If I feel they don't give too much of the puzzle away, I'll be happy to answer them.

Answer

Looking for the capitals in it I started with the ISO 3166-1 Alpha-2 Country Codes, and the list of capital cities from Wikipedia yielding this table:

Giving me the second jumbled string:

OWUHSSYMSCFR RDSSZLPA

(Shoutout goes out to Alexander Wigmore who came to the same conclusion I did while offline about the space)

Decoding the first string using a Playfair cipher with I = J and the key text LIFE yields:

MY PASSWORD IS

Decoding the second string using a Playfair cipher with I = J and the key text DEATH yields:

PASSWORD

To show an example of the second cipher at work:

All of the letters are entered into the tableau starting with the letters of the key and then the rest of the 26 letters. If a letter would be listed a second time because it was already listed in the key, it is omitted. The letter I is equivalent to the letter J for the purposes of Playfair. Other implmentations just omit Q.

Each pair of letters in the input text forms a rectangle. The opposite two corners of the rectangle are the decrypted text.

See how RD decrypts to PA in the first image. The second image shows how ZL is decrypted to WO. PA decrypts to RD as it is the opposite of the first image.

I did not know the rule that duplicate letters just stay as they are SS -> SS. This is why I was concerned that there were duplicates after my first step decoding.

Here is my full handwritten Playfair solution:

Notice the interesting bit about UH -> PA in the first tableau. When the two characters are in the same column the character above is chosen, wrapping to the bottom if required. When they are in the same row, the character to the left is chosen, wrapping around to the right if required. The opposite action is taken when encrypting.