Password-protect a zip file archive in Windows 7
You now know how to create compressed folders (zip files) in Windows 7; we will now explain how password-protection works when you try to prevent unauthorized users from opening a zipped folder. While this tutorial focuses on Windows 7, everything we explain also applies to Windows XP and Windows Vista.
Add password-protection to a compressed folder in Windows 7 / Vista / XP
The zip file creation process in Windows 7 and previous versions is very basic: it allows you to add modest compression to make your zipped files and folders smaller, without using some of the more advanced compression algorithms available in specialized software like WinZip. Part of the reason why, out-of-the-box, Windows doesn't give you the ability to password-protect compressed folders is "portability". There are no guarantees that the person on the receiving end of a password-protected zipped folder will have the tools necessary to open it.
On the other hand, any zip archives you create in Windows (using the "Right-click > New > Compressed (zipped) folder" method) will be "open-able" by users of Windows XP, Windows Vista, and Windows 7, as well as people using Mac OS X or Linux.
Note: anyone with specialized file compression software installed on their computer will (should) be able to open your zip archives, unless they were compressed and encrypted with a proprietary technology.
The bottom line is that you will need to download a specialized piece of software to be able to password-protect your zip files: with WinZip, for example, you will see a dialog appear when you add files and folders to be compressed, which includes a checkbox that lets you "Add encryption" to the files. You then simply need to pick a password, and anyone trying to access the zip file will be prompted to enter it before they can open the compressed archive or view any of the files it contains.
If you decide to use password-protection, then, make sure that you and people with whom you will exchange zip files are all using the same piece of software to create and open them, or pieces of software that are compatible with one another.up ↑