It's asking for the password you use to unlock your BlackBerry. Be careful to get it right. 10 incorrect entries will result in your BlackBerry being wiped of all your personal data.
I had a sinking feeling that was going to be your next question. You created the password on your BlackBerry already, or at least DM thinks you did. If you didn't, you are probably going to lose the contents of your device. You might possibly be able to solve the problem by creating one now. Try this. Disconnect your 9700 from the PC. Go to Options / Password and create a password. Make it simple and impossible to mistype. It is case sensitive. Exit out of the password creation page and reconnect to DM. When it asks for your password, enter the one you just created. It might work.
