Where and how are the passwords for the protected folders stored?
When you protect a folder, Password Protect generates a password checksum and writes it to the protected folder. When you unprotect the folder, Password Protect generates the checksum of the password you enter and compares it to the checksum stored in the folder. If they are equal, the password is correct. The checksum cannot be used to get the original password. This provides higher security as passwords are never stored on the hard drive or in the Windows registry.