Few things that you need to check.

1)Check if Apache is really running.
"ps -ef | grep 'apache'"

2)Check if the executable for htpasswd exists on the system
"whereis htpasswd"
htpasswd is generally found in /usr/bin/htpasswd.

3)If you are not a root user, check if you have proper permissions.Generally the permissions are 755.

Hope this helps!
nua7