To protect directories, .htaccess files is the way to go. For example, if you want to protect a directory called "test" inside of your web directory, create a .htaccess file in that directory with something like the following in it:

AuthName "restricted directory"
AuthType Basic
AuthUserFile /home/username/.passwd
require valid-user

Replace "username" with your login name. For example, if your login name is francis, use /home/francis/.passwd. Then, from the telnet shell, create a /home/francis/.passwd file using the htpasswd program:

htpasswd -c /home/francis/.passwd username

where username corresponds to the name of the user you want to give access to. This allows you to create the password file and add a user to it. For subsequent users, use:

htpasswd /home/francisc/.passwd username

For more detail on this entire process, see:

http://www.apacheweek.com/features/userauth