If a pool monitor is down because of a password mismatch will the VS not be usable?

The virtual server gets the status from the pool, and the pool gets the status from the pool members. If all pool members are down, the pool will be down, and the virtual server goes down also.

When a pool member goes down, things like persistence are deleted. The action on service down in the pool will tell what to do with open connections.

When the virtual server is down, it will not start new connections.