It allows you to create an encrypted disk device inside a file. Shade encrypts on every write operation and decrypts on every read operation to this new device. If set to 1, you can do passive connections depending on the TCP port you use. Most typical is a port scan. For example port 80 is typically a web server, port 25 is SMTP used by Internet mail and so on.
Port scanners are widely available for a variety of different platforms.
Check section 10-5 for the location of several. If the server is running a POP3 server like Exchange, you can use a brute force technique to guess passwords. Odds are that the sys admin is not logging or looking at logs for this stuff. In particular, if you are dealing with a sys admin that isn't used to the wild and wooly Unix world, it may not even occur to the admin to look. This is something that NT folks are just now having to face, whereas their Unix admin counterparts have had to maintain this level of scrutiny for a while.