I have a protected workbook with VBA codes in it. In order for the
VBA codes to work on the worksheets, I add the following code.

ActiveSheet.Protect Password:="Seattlecaseraisesquestionsabout",
UserInterfaceOnly:=True

When I opened the workbook with Notepad, I found that the password
is unscrambled and unencrypted, just plain text. The longer the
password is, the easier for it to be spotted.

No one at Microsoft thinks of encrypting or scrambling the
password? Is this a joke or what?

The same is true for activeworkbook.protect password:= also.

And if the reason you protect the sheet is to hide the formulae so
people can't peek them. Forget that. The formulae are stored in
plain text so everyone can see them.