Because the "middle" content of your joomla template has very limited width size. Do you have modules in both sides? (left and right) I guess you have, this explains why you have very limited width size in the middle.
Well... you can do one of these:
1- Change the word of "Forgot your password?" to just "Forgot?"
Which basically have the same meaning, right? or am I right? :)
2- You can move the "Forgot your password?" link from "inside" the box to the below the box.
The file you need to make edits is here:
And the line to generate that forgot password link is this:
Take it from there and move 2 line below (move it after </div>)
If you want to do the 1st option; The text of "Forgot your password?" is taken from joomla language INI file with the parameter of: COM_VIRTUEMART_ORDER_FORGOT_YOUR_PASSWORD
either find the parameter in the language INI file, and change it OR simply change element with this: