From your comment I take it that you just created a plain text password. This will not work for Apache, as Apache expects the password in .htpasswd to be hashed by the MD5 algorithm.
There are several tools available online for generating .htpasswd files, but the easiest might be the one that comes with Apache, it's called
htpasswd. On RHEL (Fedora, Red Hat, CentOS) systems you'll need the httpd-tools package (
yum install httpd-tools). On Ubuntu systems it's in the apache2-utils package (
apt-get install apache2-utils). If you're using XAMPP on Windows it's in the folder xampp\apache\bin.
To use htpasswd with the .htaccess file you've already got configured, you'd simply do
htpasswd /protected/.htpasswd user and then type in your desired password (twice) when prompted. It will then generate your .htpasswd file in the /protected/ directory.