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The devices have "profiles" to allows different users to set up their own environment, but I've never used them myself and don't know if they are password protected. Maybe someone who uses profiles can comment.
As far as password protection goes, I think SkyDream is right. Even the copy of unzip on the device wasn't built with password functionality enabled. The device does have libz installed, so you could conceivably build your own application to open password protected zip files and display the contents, but it would take some work. Still, it can be done if you're inclined that way. There is an official SDK for the device to encourage such creativity.
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