I have tried to start an album with password protection.  I set the privacy settings do not show in search, friends only on everything and set a password.  When I go back to my news feed the photos are visible and I have had one like.  Love the fact one of the photos was liked but I didn't want them visible to everyone.  Am I missing something?

we have been trying to figure that out ourselves.. we only want people we added as friends to see. I do think that if you share anything in the feed it is for all to see. It would be nice if it was only available to friends but i have had the same thing happen -- people liking and commenting and they are not on our friends list.. 

i have sent Tor an email and will let you know if i find out anything good

I would like an update on this as well. I would prefer not to have the private photos show up in the news feed. Defeats the purpose of a private album.

Any more info on how to make a private album?

I think it has to do with the privacy settings.  You can turn off new albums, seems to have worked for me.