Should we just store our passwords in a notepad document and throw it in our AppData folder? That is security by obscurity and it is wrong.
Yes, you should. If you protect your AppData, it's perfectly secure, nothing obscure in any way.
You have to understand that in an enterprise, people use their Active Directory accounts to log into internal FTP servers. We use SSL or SSH to encrypt the connection so the login is not exposed. The login info is passed to the local server which then uses it for file system access. Without this crucial piece, users would have to remember more logins and would not have the tight controls that an Active Directory login requires.
So, let's say FileZilla would obfuscate it's passwords. What would that change? Instead of the raw passwords, an attacker gets the obscured password. Since FileZilla is open source, he would just look at the source and *ding* he has the original password. And in case of proprietary software he still has the source. Take a disassembler and *ding* again original password. And that doesn't even consider tools specialized in unobfuscating passwords which known the obfuscation schemes of most programs.
If the user does not want to memorize passwords, he has to store them somehow in some place. If that place is not secure, he can as well put a post-it note on his monitor.
In the discussion that you locked, it was clear that the majority were requesting encrypted passwords. Why would you not want to meet the overwhelming requests by your users? That will only muddy your reputation and in the end devalue this project.
If you see a couple of flower people protesting to legalize certain drugs, do you see the majority of the population protest against it at the same time? No? Thought so. Yet by your logic, the few protesters would be the majority.