Fail operational = the initial condition of a 3 autopilot system, a failure would mean the autoland is still OPERATIONAL. LAND 2
Fail Passive = A second failure of a 3 a/p system would leave only one A/P resulting in a fail passive meaning a subsequent fail would leave the aircarft in a passive condition.
my expirience is of only 3 chanel systems, i do belive however that the 737 is capable of fail operational with some magic it does!