Function to read input from the Console while masking the output. Useful for reading passwords.

ConsoleReadMasked.cs

/// <summary>
/// Reads the next line of characters from the standard input stream (Console). 
/// Outputs a '*' character for each character read, instead of the actual character.
/// </summary>
/// <returns>The next line of characters from the input stream.</returns>
public static string ReadLineMasked()
{
    var password = new StringBuilder();
    ConsoleKeyInfo pressed;

    do
    {
        pressed = Console.ReadKey(true);

        if (pressed.Key == ConsoleKey.Backspace)
        {
            if (password.Length <= 0)
                continue;

            Console.SetCursorPosition(Console.CursorLeft - 1, Console.CursorTop); // Go back 1 position
            Console.Write(' '); // Erase * char
            Console.SetCursorPosition(Console.CursorLeft - 1, Console.CursorTop); // Go back once again, the erasing caused the cursor to move.
            password.Remove(password.Length - 1, 1); // Remove char from string builder.
        }
        else
        {
            Console.Write('*');
            password.Append(pressed.KeyChar);
        }
    } while (pressed.Key != ConsoleKey.Enter);

    return password.ToString();
}

Can easily be modified to use a SecureString object. Info: http://msdn.microsoft.com/en-us/library/system.security.securestring.aspx