How do I set up password protection for an external hard drive?
Password protecting a drive isn't really possible (or even useful) without also encrypting the contents of the drive. Honestly I'm not even certain that's something you can do since, what would the password be granting access to if the contents of the drive weren't encrypted?
So really the question you want to ask is: how do I encrypt an external hard drive?
With Lion you have FileVault to achieve this. FileVault makes it easy to encrypt your primary drive but you can also use it to encrypt the contents of remote storage. Just about any read/write storage media you attach via USB or FireWire can be FileVault'd and secured. The caveat? You can only use FileVault-protected drives on other Lion machines.
- Mount the drive
- Open Disk Utility
- Select the drive and click on the Erase tab
- For the format pick either Mac OS Extended (Journaled, Encrypted) or Mac OS Extended (Case-sensitive, Journaled, Encrypted) from the list of available options. In most cases you'll want the former.
- Press Erase to start the format
- You'll be asked to confirm your choice and enter a password for the volume
- Once the formatting is complete you'll need to enter the password to be able to mount and view the contents of the drive
If you're not running Lion or you want something that's portable across multiple OSes you can look at TrueCrypt. It's free software for encrypting file systems, much like FileVault, but it's available for Windows, OS X (both Snow Leopard and Lion) and Linux so you can access the encrypted remote media from just about any machine.
If you're running Mac OS X 10.7 "Lion" you can create an encrypted (password protected) drive (partition) using Disk Utility. This drive will only be useable by Macs running Lion. Also, this is a formatting process. You can't encrypt a drive that has data on it.
Another option would be to use Disk Utility to create (an) encrypted Disk Image (or Sparse Image) file(s) on the external drive and store sensitive data within the protected image(s). This solution would allow you to access the data from Macs running any relatively modern version of the OS. (Not sure exactly how far back you can go.) Encrypted Disk Images are (to my thinking) one of the hidden "gems" of the Mac OS and are underutilized in my experience.
Beyond that there are third-party options like PGP, but I don't have (recent) experience with them so I can't comment from experience.
If you want to use features built into the operating system, you could create an encrypted disk image on the external drive using Disk Utility. This would provide password protection.
Another option would be to use an external utility like TrueCrypt. I haven't used it myself, so I can't speak for its effectiveness or ease of use, but I have read good reviews. When Lion first came out there were some compatibility problems, but they seem to have been resolved as of September 2011.