What am I doing wrong? Vb.net

You have defined tokenBotChar as a local variable. The value of the variable will not be persisted between calls to your method.

If you want it to persist between calls, make it a class-level field:

Public Class Form2
    Private tokenBotVar As Integer
    
    Private Sub Button1_Click(sender As Object, e As EventArgs) Handles Button1.Click
        tokenBotVar = tokenBotVar + 1
        If tokenBotVar = 0 Then
            tokenBot.UseSystemPasswordChar = False
        End If
        If tokenBotVar = 1 Then
            tokenBot.UseSystemPasswordChar = True
        End If
        If tokenBotVar = 2 Then
            tokenBotVar = 0
        End If
    End Sub
End Class

Alternatively, make the variable Static - this will make it a private field behind the scenes, with a compiler-generated name to ensure it does not conflict with static variables from other methods in the same class:

Public Class Form2
    Private Sub Button1_Click(sender As Object, e As EventArgs) Handles Button1.Click
        Static tokenBotVar As Integer = 0
        tokenBotVar = tokenBotVar + 1
        If tokenBotVar = 0 Then
            tokenBot.UseSystemPasswordChar = False
        End If
        If tokenBotVar = 1 Then
            tokenBot.UseSystemPasswordChar = True
        End If
        If tokenBotVar = 2 Then
            tokenBotVar = 0
        End If
    End Sub
End Class

Static - Visual Basic | Microsoft Docs[^]

Quote:

What am I doing wrong?

If you want to learn how to fix your code by yourself, the first step is to understand what your code is really doing, the tool of choice is the debugger.

Public Class Form2
    Private Sub Button1_Click(sender As Object, e As EventArgs) Handles Button1.Click
        Dim tokenBotVar As Integer ' This recreate every time the variable with value 0
        tokenBotVar = tokenBotVar + 1
        If tokenBotVar = 0 Then
            tokenBot.UseSystemPasswordChar = False
        End If
        If tokenBotVar = 1 Then
            tokenBot.UseSystemPasswordChar = True
        End If
        If tokenBotVar = 2 Then
            tokenBotVar = 0
        End If
    End Sub
End Class

Your code do not behave the way you expect, or you don't understand why !

There is an almost universal solution: Run your code on debugger step by step, inspect variables.
The debugger is here to show you what your code is doing and your task is to compare with what it should do.
There is no magic in the debugger, it don't know what your code is supposed to do, it don't find bugs, it just help you to by showing you what is going on. When the code don't do what is expected, you are close to a bug.
To see what your code is doing: Just set a breakpoint and see your code performing, the debugger allow you to execute lines 1 by 1 and to inspect variables as it execute.

Debugger - Wikipedia, the free encyclopedia[^]

Mastering Debugging in Visual Studio 2010 - A Beginner's Guide[^]
Basic Debugging with Visual Studio 2010 - YouTube[^]

The debugger is here to only show you what your code is doing and your task is to compare with what it should do.