The default password for the user 'ubuntu' on Ubuntu is blank.
If you want to run the 'Live CD' from your hard disk then there's no need to make an image of it using dd.
You can simply copy the casper directory to your hard disk and create an entry in grub which looks like:
title Ubuntu Live
kernel /lucid32/vmlinuz boot=casper noprompt ignore_uuid live-media-path=lucid32 locale=en_GB.UTF-8 quiet splash --
Here I've copied the contents of the casper directory into a directory named /lucid32 on the root of a data partition. It's the UUID of the data partition that's added to GRUB's boot option. The option 'live-media-path=' tells casper, the Ubuntu live boot software, where to look for the filesystem image so you can create the directory by whatever name you like.