Threatening email!

A hacker emailed me a password that I have used in the past and is trying to extort money from me, they say that they have compromised my devices and have stolen my data, and the say that their virus or what ever cant be detected by antivirus software... can that be true? . I ran a full system scan and one virus was removed but I don't know if it was related to the email I received . How could some one have found a password that I use to use when I don't save passwords on anything? 

Another question? ... if you open an email from an attacker , will they know automatically if you've read it, and with this latest email that I received I was unable to see where it came from .. it appeared to be sent by me and received by me, how did they do that?