Hi,
I was wondering if there is a way to keep the main area of your site password guarded with an .htaccess file and still allow visitors to freely access a directory on your site.

For example mysite.com/index.html cannot be accessed without password, but mysite.com/forumfolder/index.php can be accessed freely.

Is this possible to set up?

I don't think it'll work like that.
But try it out.
And remember to make backup files of your .htaccess!