The security department requires that shared links are password protected and they do not allow users to include the password to the password-protected link in the same mail. Via the Serv-U settings, they have enforced passwords and also disabled the option to include the password in the mail to the recipient(s). When disabled, the "Include the password in the email" is grayed out but still visible to users.
When the option to include the password in the email is disabled then the check box should disappear from the UI, or alternatively, Serv-U should have a setting to show/hide the checkbox when disabled.

Instead of including the password to the password-protected link in the same mail, Serv-U should have the option to send the password in a separate mail to the recipient(s)