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Password file not read when connecting through svrmgrl utility

This is regarding the orpwd utility on Windows 2000/Oracle 8.1.7. I have set remote_login_password to exclusive and created a password file pwdr.ora using follow command:
orapwd file=e:oracleora81databasepwdr.ora password=hariom

entries=5;
The file is created at the given position, but when I connect through the svrmgrl utility as internal or sys, it allows me to connect directly. What would be the reason that it is not reading my password file?
When you sign on to the database server as a member of the ORA_DBA or ORA_OPER group, then you will be able to connect as SYS or INTERNAL without authentication. You have already been authenticated. You do not need a password file in this case. You will need a password file is you attempt to connect as SYS or INTERNAL from a remote machine or from an account that is not part of one of these groups.

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