Hi, this error usually means Windows no longer has Acrobat/Reader registered as the app for PDF files, so Word cannot launch it when you double-click the embedded PDF.
Please try this:
1. Right-click any standalone .pdf file, choose Open with > Choose another app, select Adobe Acrobat (or Acrobat Reader), and enable "Always use this app to open .pdf files". You can also set this under Settings > Apps > Default apps for the .pdf file type.
2. If it is already set, uninstall and reinstall Acrobat Reader. That is what fixed the identical issue in this thread: https://community.adobe.com/questions-9/saved-a-pdf-in-a-word-document-now-won-t-open-1645464
One extra note: saving a PDF inside a Word document does not really password-protect it, because anyone with the Word file can extract the embedded PDF. To protect the PDF itself, open it in Acrobat and use the Protect tool to add a password.
Hope this helps!