Powershell Parameters

Specifying correct type for password should be enough, try:

Param (
    [Parameter(Mandatory=$True)]
    [string]$FileLocation,

    [Parameter(Mandatory=$True)]
    [Security.SecureString]$password
)

PowerShell will "mask" password (same as for read-host -asSecureString) and result type will be the one that other cmdlets may require.

EDIT: After recent comments: solution, that gives both option to provide plain text password, or force user to type password (but mask it same way Read-Host -AsSecureString would) and in both cases get [Security.SecureString] in the end. And, as a bonus, you get some fancy prompt for your secret password. ;)

[CmdletBinding(
    DefaultParameterSetName = 'Secret'
)]
Param (
    [Parameter(Mandatory=$True)]
    [string]$FileLocation,

    [Parameter(
        Mandatory = $True,
        ParameterSetName = 'Secret'
    )]
    [Security.SecureString]${Type your secret password},
    [Parameter(
        Mandatory = $True,
        ParameterSetName = 'Plain'
    )]
    [string]$Password
)

if ($Password) {
    $SecretPassword = $Password | ConvertTo-SecureString -AsPlainText -Force
} else {
    $SecretPassword = ${Type your secret password}
}

Do-Stuff -With $SecretPassword

I've used Jaykul's trick here to cheat with prompting for secure password. ;) It will make this parameter very hard to use in CLI mode (-Type your secret password won't work as expect), so it should force users of the script to either omit password (and get masked prompt) or specify it with -password parameter that accepts regular string and converts it to secure string inside script logic.

It's a little hard to decipher what you're trying to do...

Edit; like mentioned by Ryan, you currently already are specifying it as a string...

But in some code, I've used the following function when using Read-Host and SecureStrings

function AskSecureQ ([String]$Question, [String]$Foreground="Yellow", [String]$Background="Blue") {
    Write-Host $Question -ForegroundColor $Foreground -BackgroundColor $Background -NoNewLine
    Return (Read-Host -AsSecureString)
}

In your case you'd call it by doing the following;

Param (
    [Parameter(Mandatory=$True)]
    [string]$FileLocation,

    [Parameter(Mandatory=$True)]
    [string]$password = AskSecureQ "Type the password you would like to set all the users to"
)

EDIT: Given comments, and just for the hell of it... here's an alternative method used to convert the above secure string into plain text within Powershell;

# Taking a secure password and converting to plain text
Function ConvertTo-PlainText( [security.securestring]$secure ) {
    $marshal = [Runtime.InteropServices.Marshal]
    $marshal::PtrToStringAuto( $marshal::SecureStringToBSTR($secure) )
}

You'd use it like this;

$PWPlain = ConvertTo-PlainText $password

Too summarise, you take the password in masked, it's a secure string, you can then break this down into plain text for use elsewhere, a real word example would be if certain CLI programs only accept passwords being passed into them as plain text, this helps with automation where you don't want to hard code a password into your script..

I'm not sure I understand... it appears that you already are doing that. By setting the parameter to mandatory, Powershell will prompt you for it if you don't provide it on the command line, and with [string] you are ensuring that the only data type that can go into that variable is System.string.

EDIT: Building on Bartek's answer, do this in your script:

Param ([Parameter(Mandatory=$true,ValueFromPipeline=$true)][Security.SecureString]$Password)       

Then you have to pass your script a SecureString object like so:

PS:> Read-Host -AsSecureString | .\YourScript.ps1