I witnessed the same where someone installed 7.0.x and couldn’t reset admin pw by removing passwd and restarting. I didn’t have much time to diagnose and recommended a reinstall.
It wasn’t recreating the passwd file. It was windows as well.
@isiddiqui004, have you changed the default credentials i.e.
admin/changeme? If you have and forgotten the same you can refer to the following answer to reset your password
If this is for personal use, you can always re-install 🙂