From the enter-passphrase screen in sync setup, canceling should only disable...

chrome/app/generated_resources.grd

 <?xml version="1.0" encoding="UTF-8"?>
 
 <!-- This file contains definitions of resources that will be translated for
 each locale. -->
 
 <grit base_dir="." latest_public_release="0" current_release="1"
       source_lang_id="en" enc_check="möl">
   <outputs>
     <output filename="grit/generated_resources.h" type="rc_header">
       <emit emit_type='prepend'></emit>
@@ skipping 8348 matching lines @@
       <message name="IDS_SYNC_PASSPHRASE_MISMATCH_ERROR" desc="Error message when the passphrase and confirmation don't match.">
         You must enter the same passphrase twice.
       </message>
       <message name="IDS_SYNC_INCORRECT_PASSPHRASE" desc="Message when the passphrase is incorrect.">
         The passphrase you entered is incorrect.
       </message>
       <message name="IDS_SYNC_PASSPHRASE_RECOVER" desc="Message about how to recover from a lost passphrase.">
         If you've forgotten your passphrase, stop and reset Sync via the Google Dashboard.
       </message>
 
+      <message name="IDS_SYNC_PASSPHRASE_CANCEL_WARNING_HEADER" desc="Header for the passphrase cancel warning.  Should be phrased as a yes-or-no question.">
+        Skip password sync?
+      </message>
+      <message name="IDS_SYNC_PASSPHRASE_CANCEL_WARNING" desc="Warning message when the passphrase entry is canceled.">
+        Without a passphrase, your passwords will not be synced on this computer.  You can enable password sync by changing your sync settings and entering your passphrase.
+      </message>
+      <message name="IDS_SYNC_PASSPHRASE_CANCEL_YES" desc="String for 'yes' button on passphrase cancel warning dialog.">
+        Skip password sync
+      </message>
+      <message name="IDS_SYNC_PASSPHRASE_CANCEL_NO" desc="String for 'no' button on passphrase cancel warning dialog.">
+        Enter passphrase
+      </message>
+
       <!-- Login dialog strings -->
       <message name="IDS_SYNC_MY_BOOKMARKS_LABEL" desc="Title of the sync login dialog.">
         Set up sync
       </message>
       <message name="IDS_SYNC_LOGIN_INTRODUCTION" desc="The message to display at the top of the login dialog">
         <ph name="PRODUCT_NAME">$1<ex>Google Chrome</ex></ph> sync makes it easy to share your data (such as bookmarks and preferences) between your computers.
         <ph name="PRODUCT_NAME">$1<ex>Google Chrome</ex></ph> synchronizes your data by storing it online with Google when you sign in with your Google Account.
       </message>
       <message name="IDS_SYNC_LOGIN_SIGNIN_PREFIX" desc="The first part of the sentence that is displayed after the login info">
         Sign in with your
@@ skipping 2830 matching lines @@
     </includes>
     <structures fallback_to_english="true">
       <structure name="IDD_CHROME_FRAME_FIND_DIALOG" file="cf_resources.rc" type="dialog" >
       </structure>
       <structure name="IDD_CHROME_FRAME_READY_PROMPT" file="cf_resources.rc" type="dialog" >
       </structure>
     </structures>
 
   </release>
 </grit>