Upgrade to SQL 2008 and use TDE on the database (Enterprise edition only). Otherwise 3rd party tool of some form (backup tool, password protected archiver, etc)
The password on SQL backups is not secure, books online does make that point.
Microsoft Certified Master: SQL Server, MVP, M.Sc (Comp Sci)SQL In The Wild
: Discussions on DB performance with occasional diversions into recoverability
We walk in the dark places no others will enter
We stand on the bridge and no one may pass