Thanks BC... The file size is 930 MB... everything in the folder did compress successfully... The problem were successfully created a password... it did for some but not for most...
There is only one ZIP archive. the "compressed folder" is not a folder, but rather a .zip file. Windows XP has a built-in shell extension that let's you look at zip archives as "compressed folders" (Which is silly, because then people assume based on that that they are dealing with a folder, when they are really dealing with a file).
HOWEVER: Within a zip archive, each file is compressed separately, which presumably includes any encryption done via a password. In your case if the file is not actually corrupted but just in a odd inconsistent state, you might have better luck opening it with another archiver, which might correctly recognize that not all the files are encrypted. I would make a copy of the file, first, though.
Is downloading a third party archive program a possible fix? I would be able to transfer the folder and its contents to the new software and extract from there?
A Compressed folder is actually a .ZIP archive, for which there are plenty of software products available. For what it's worth, I always disable the built-in OS support for ZIP files on Windows, because I find it unreliable and annoying, instead opting for other software products and dealing with the .zip archives as actual files, because that is what they are.