Trying to password protect a file. Encrypted image created...now what?

You can't add data to a dmg. It's read-only unless you selected read/write disk image and you must create another file

You can encrypt it in Word https://kb.wisc.edu/page.php?id=17335

It looks like you did the image wrong. Try again what Apple says and choose read/write disk image

The advice you're getting from mende1 is not accurate. If you accurately followed the directions at that link you gave, the disk image is certainly not read-only! When creating a new disk image, the default is to create a read/write image, so unless you changed that setting when creating the disk image, that's not your problem.

My suspicion is that you're not using the image file properly. Once you have the disk image file, here's what you need to do to put the Word file in question on it:

1) Double-click the disk image file that you created. This will "mount" the disk image as a "disk," which will show up on your desktop (if you have the Finder set to show such things on the desktop) or in the sidebar of any Finder window.

2) Drag the Word file onto the "disk" - NOT the disk image file! It should copy the Word file onto the "disk".

3) "Eject" the "disk" by dragging it (NOT the disk image file!) to the trash, or clicking the eject icon next to it in the sidebar of a Finder window. Once the disk is ejected, the file is locked and the contents cannot be accessed without the password.

4) For the most security, put the original Word file in the trash and choose Secure Empty Trash from the Finder menu. Before doing this, though, it would be wise to try to re-open the disk image and make sure you successfully copied the Word file onto it, and that you can open it just fine.

I saw that

You have to unmount the disk. Open Finder and unmount the image in the sidebar

You have to remember to eject it yourself. Of course, if you require a password to log in to your computer, and on waking from sleep or screen saver, nobody would be able to access the contents of that file even if you left it mounted. It is possible for a knowledgeable user to reset your account password, but doing so would require a forced restart with those protections in place, which would mean that the disk image is no longer mounted. And there's absolutely no way to reset the password on that disk image file, so as long as someone with physical access to your Mac can't guess the password somehow, it's safe.

Also, yes, the file itself and the virtual "disk" can have different names. To change the name of the "disk", simply select it in the Finder and press return, then type the name you want, then press return again.