The Recovery Password given to you during installation is extremely important. It allows you to get into Magic Folders (or uninstall) if you forget your password, or something else were to happen such as corruption of your password data. Keep it in a safe place. Should you forget your password uninstalling Magic Folders without the recovery password would be very difficult.
The Recovery Password is formatted it as a credit card number to help hide its purpose.
When entering your recovery password make sure you include the dashes.