Having Password Protected Files in SharePoint

Hello, I have a colleague who has been actively storing files within a SharePoint site in the business, this consists of about 100 subfolders including 5-10 PDF documents within. They are asking actively if a password can be applied to those PDF documents to restrict access.

Since I have learned the only way to apply a password is when the document is being created or using Acrobat (which we do not have). Obviously there are hundreds and thousands of documents that this would need doing too.

I understand SharePoint well enough to understand making groups and modifying user access however I cannot find a viable way to solve this. I have tried restricting the Sharing options however groups and members can still see the documents despite not being listed on users who should have access.

Furthermore, it specifies that I can add groups to the sharing options however I cannot do so. I thought it would be as simple as specifying the group name and selecting that option but instead it only returns users and emails etc.

Anybody have any advice? Thank you!