By default, PKWARE products utilize strong encryption. In order to extract a strongly encrypted archive, you must use a utility that supports strong encryption such as Smartcrypt, PKZIP, SecureZIP and the Free ZIP Reader by PKWARE. Windows compressed folders (pictured above) does not support strong decryption. If you are using an application that supports strong decryption, please verify the password is correct with the creator of the archive.
Information on using the Free ZIP Reader by PKWARE can be found here.