Hi fl00d and thanks for the interest.
I found a few free solutions, like this one
here, which I installed but doesn't seem to work. The problem seems to be caused by CPANEL. In the old days we'd just set .htaccess manually but I can't even do that with my current server account. Seems like protected dirs only work if the password file is located on the /home/user/.htpasswds/ dir!
And CPANEL seems to scan for .htaccess files, as I set this one manually and CPANEL was able to pick it up. I saw it marked as protected when I searched for it within CPANEL.
This is probably preventing the script from working.
One other detail I forgot to mention is that I'm doing this on a subdomain, hence the need to have a user management script, as I cannot give full CPANEL access to the person handling the access management.
Does any one has any ideas? Or will I have to buy a new server account just for that client, so he can have full CPANEL access?
Plenty of those user management scripts
here, BTW.