'Wee turtle', that's a scary sounding password! (8)
I believe the answer is:
terrapin
This might be a double definition.
'wee turtle' is the first definition.
'terrapin' can be an answer for 'turtle' (terrapin is a kind of turtle). I'm unsure of the 'wee' bit.
'a scary sounding password' is the second definition.
Although both the answer and definition are singular nouns, I don't see how one could define the other.
'that's' acts as a link.
Can you help me to learn more?
(Other definitions for terrapin that I've seen before include "Hardback" , "edible, freshwater reptile" , "Little turtle" , "temporary building" , "freshwater creature" .)