Hi Jordan

To place a password on a Word document -- new or existing -- go to the
File > Save dialog. If you have Word 97, click the Options button on
the right and look for the password boxes at the bottom of the dialog.
If you have Word 2000, click the Tools button at the upper right and
select General Options; in Word 2002 or 2003 it's called Security
Options. You can require separate passwords to be able to open the
document and to be able to modify it (strictly speaking, the 'modify'
password is required to be able to save changes with the same
filename).

Creating security settings for a folder isn't a Word operation. You do
that in Windows Explorer -- right-click the folder's icon and select
Sharing (in Windows XP, Sharing and Security), then click the Security
tab and assign rights to specific users. I don't remember any longer,
but I don't think this capability is available in Windows 9x.

--
Regards,
Jay Freedman
Microsoft Word MVP        FAQ: http://www.mvps.org/word