Yes, the system password can be set to be blank.
However, it is strongly recommended that you set the password to login your host in order to host security. Without system password, your host will be fully exposed on the LAN. Then other hosts on the LAN can access your drives other than C drive without any verification.
If you cannot find Local Policy in the following ways, you can choose Start > Run, and enter the secpol.msc command to open local policy management.
Configure the Windows system as follows:
Open the Control Panel, click Administrative Tools, click Local Security Policy. On the Local Security Settings page, choose Security Settings > Local Policies > Security Options, set Accounts: Limit local account use of blank passwords to console logon only to Disabled.
Note: This function is available for the versions later than SunLogin remote client 2.0.