This information was provided by David.
See also the SNES Password Analyser.

	bit 4	bit 3	bit 2	bit 1	bit 0
Character 1	0	l0	h3	t0	t7
Character 2	x1	l1	h2	t1	t6
Character 3	x2	l2	h1	t2	t5
Character 4	x3	l3	h0	t3	t4
Character 5	s0	l4	x	t8	t9
Character 6	s1	t10	t11	t12	t13
Character 7	s2	s3	s4	t14	t15

l4 l3 l2 l1 l0 = level number (0=level 1)
h3 h2 h1 h0 = number of hit points
t15 t14 t13 t12 t11 t10 t9 t8 t7 t6 t5 t4 t3 t2 t1 t0 = elapsed time (25506=1 hour)
x1 x2 x3 = xor checksums
s4 s3 s2 s1 s0 = sum checksum
0 = must be 0
x = can be 0 or 1, has no meaning

x1=l1^l4^h0^h1^t0^t1^t2^t5^t7^t8^t10^t13^t15^1^x

0	l0	h3	t0	t7
x1	l1	h2	t1	t6
x2	l2	h1	t2	t5
x3	l3	h0	t3	t4
s0	l4	x	t8	t9
s1	t10	t11	t12	t13
s2	s3	s4	t14	t15

x2=l1^l2^l3^h0^h2^h3^t1^t4^t5^t8^t9^t10^t12^t14^t15

0	l0	h3	t0	t7
x1	l1	h2	t1	t6
x2	l2	h1	t2	t5
x3	l3	h0	t3	t4
s0	l4	x	t8	t9
s1	t10	t11	t12	t13
s2	s3	s4	t14	t15

x3=l0^l1^l3^h2^t2^t3^t5^t6^t7^t8^t9^t11^t14^x

0	l0	h3	t0	t7
x1	l1	h2	t1	t6
x2	l2	h1	t2	t5
x3	l3	h0	t3	t4
s0	l4	x	t8	t9
s1	t10	t11	t12	t13
s2	s3	s4	t14	t15

s4 s3 s2 s1 s0 = the sum of non-checksum bits

	bit 4	bit 3	bit 2	bit 1	bit 0
	0	l0	h3	t0	t7
	x1	l1	h2	t1	t6
	x2	l2	h1	t2	t5
	x3	l3	h0	t3	t4
	s0	l4	x	t8	t9
	s1	t10	t11	t12	t13
+	s2	s3	s4	t14	t15
=	s4	s3	s2	s1	s0