No disrespect intended, but I would rather not go over the literature on IQ with you. If you are interested I do discuss this literature in this book in Chapter 7 which is called "What IQ Tells You".
Lots of tasks, such as the ability to repeat a sequence of numbers backwards, are highly correlated with IQ.
In general though, the ability to guess the teacher's password is not a measure of literacy. To the point that entered this line:
A) That an apparently literate and intelligent person thought that a state-standardized test was an accurate measure of literacy
I think that (A) is true because of Spearman's g. The evidence for g is overwhelming.
Suppose there was a test with a single score that was 50% based on password guessing and 50% based on literacy: It is not the case that because password guessing and literacy both correlate to intelligence, that ...
Post will be returning in Main, after a rewrite by the company's writing staff. Citations Galore.