To password protect directory:
Note: At this time, cPanel can only protect directories, not individual files. Any file that needs protection can be placed in a protected directory.
Warning! This password has a maximum of 8 characters. Any characters typed beyond the first 8 will not be required by visitors.
To ensure you directory has been password protected, launch you browser and visit the folder. If the browser prompts you to login, then your directory has been password protected.
Check the folder ownership on the .htpasswds folder (above public_html). Change them from user.user to user.nobody and ensure the permissions are set to 750 and then refresh your protected page. The error will be gone. Note: Shared and reseller customers will need Osirion's help to change any file's ownership. Please join us in live chat or on the phone for this change.