Ok... you are about to enter one of the most exciting and complex features of Drupal: the form API or - for brevity - FAPI. Some theory first, and then the solution! :)
All forms in Drupal are built by the drupal_get_form() function, that accepts an array as parameter. Each field in the array is basically a field of your form, and each field has a number of proprieties, each of them define additional characteristics of the the field, like for example its default value, if it is required or optional and - yes - in the case of textfields... how large they have to be! You can find a detailed explanation of the structure of form arrays here on the drupal site.
The beauty of the form API is that the function that renders the form invokes a number of hooks at various moments during its building process, so you can implement these hooks in order to "alter" a form before it is finalised and sent to the browser.
The most commonly hooks for form alteration are hook_form_alter() and hook_form_FORM_ID_alter(). The first is executed for any form processed by the drupal engine, the latter only for the specific form named "FORM_ID". I will not get into any more details on the internal working of the form API, but here you can read more.
As for your specific case, I assume you are using the standard "user block" shipping with Drupal. In this case I suggest you implement hook_form_FORM_ID_alter() in a form similar to this one:
mymodule_form_user_login_block_alter(&$form, $form_state) {
$form['pass']['#size'] = 43;
}
Hope this helps! :)
