I have an iMac 27" desktop, as well. My Firewall is set to OFF. Didn't even know it. If I now set it to ON, it says I must always know my password OR ELSE all will be LOST forever. That part scares me almost as much as leaving it OFF. It also says that if I turn it ON, it could take quite a while.
I think you've misread something.
FileVault has a warning about needing a password. Which makes sense because it uses a password to encrypt the hard drive. If you encrypt the disk and forget your password (as well as the recovery password), then there's no way to decrypt the data. That's the nature of encryption: without a key, you can't read it.
Firewall is in the segmented control immediately next to FileVault. I see no warning about passwords, and I can turn it on and off with impunity (after clicking Unlock and entering an admin password). There is no delay and no warning dialog for this.
This is on OS X version 10.8.0.
If you want to know the difference between the two features, you can google
FileVault, and then google
OS X Firewall.