Question: My daughter set a password on it and now does not remember it, how can I remove/reset the password?

The software version is 3.1.3.

Answer: 
Found it and putting it here for reference, simply hold the home and power button down for 10 seconds (ignoring the power off slider when it comes up) then keep the home button pressed down and release the power button. This needs to be done while connected to iTunes. At that point iTunes will offer to restore it.
If you don't have iTunes on your computer they will do it for you in the apple store.