what is the password machine for?

[soapstone]

and do you ever unlock more costume parts from rewards?

[AutoSaver]

For passwords....

Anyways, I think its on PG 1 or 2 in this forum. But there is a list of codes you enter into them. Gaining very powerful weapons.

Sorry, you don't unlock any costumes besides the ones from the start.

[Roukou]

No. Sega held out on us with this bonuses from the vending machine.
The only thing worth getting is the Blaze Cannon and that giant spear, everything else are just wands that look like gaming magazines.

Though, why they didn't let us have the bonuses as teh Japanese version I don't know why.
I would have loved to have had Miku Hatsune's leek, and a hylia Shield in m invo.