show_passwords_fields actually is a filter! You can hook into it as you did above, using an anonymous function:
add_filter( 'show_password_fields', function(){return true} );
You can also write a function, and use it as a callback:
function wpse_79994_show_password_fields() {
return true;
}
add_filter( 'show_password_fields', 'wpse_79994_show_password_fields' );
However, as are only returning a boolean (true or false) value, you can do it like so:
add_filter( 'show_password_fields', '__return_true' );
Now, I understand that all of this talk about filters doesn’t actually solve your problem. The code you use above should, and does work, eccept you are returning true. As you can see from the apply_filters() function in the first piece of code in your question, true is actually the default value: you aren’t actually changing anything!
If you wanted the result of apply_filters('show_password_fields', true ) to be false, you can use this code:
add_filter( 'show_password_fields', '__return_false' );
Edit: The reason that, even with your filter, apply_filters('show_password_fields', true ) is still returning false must be because a filter in one of your plugins is changing it to false after your filter is applied. You can override this by increasing the priority of your filter:
add_filter( 'show_password_fields', '__return_true', 999 );