Those that are subscribed to the plan that gives access to that folder must login. If they're already logged in then they must logout and login. This is so it can push their login credentials to the htpasswd file. I don't really suggest using this as a means to deliver files. You're far better off just using DOCman, which masks direct file locations and protects direct access to the file folder.

Opening a support ticket is going to be no different then our communication now except will be private.

Is your server on windows or linux? You should be able to see this information within Joomla backend in System Information (e.g. Site > System Information > System Information then check "PHP Built On"). Does your test member exist in the htpasswd, but their login does not work?

Ok, try using the username and password combo stored in htpasswd to login to Joomla. I'm thinking maybe some of the characters in the password are being stripped. Please create a new test user with the password 12345678, subscribe them, check that they're in htpasswd then see if you can login with them.