rspskumar-704119 (1/17/2010)
If you are looking for high level protection to your backups use TDE[Transparent data encrytion which is more powerfull than passwords]
Available only in SQL 2008. Not in SQL 2005, which the OP is asking about.
Gail Shaw
Microsoft Certified Master: SQL Server, MVP, M.Sc (Comp Sci)
SQL In The Wild: Discussions on DB performance with occasional diversions into recoverability