I can't see anything wrong with what you have.
However, it may be that you haven't configured Apache to look for the htaccess file.
I can't have a file with just an extension, and no name could I?
The idea of name+extension isn't quite accurate anyhoo. Really, a filename includes the file extension.
Remember, too, that all this comes from Unix land, where extensions aren't so heavily relied upon. In Unix, a filename that begins with a dot means that the file is (usually) hidden.
Windows doesn't like filenames that begin with a dot -although it is possible to do. I save all confusion by calling my files: htaccess.conf
Here's the meat. You may have neglected to put the name you have chosen for your access file into the httpd.conf (the Apache config file)
AccessFileName password.htaccess
Probably best to change this name to something else anyway. I see that you understood .htaccess to be the extension (for a file with no name !). It is just a filename. For understandability, perhaps use something like mine..
AccessFileName htaccess.conf