This post is a bit late as it goes, but after reading the post and considering the audience for whom the text seems to be directed (that being a user with one or both legs on the 'beginner admin' side of the fence), it seems only decent to post a word of caution or three regarding Windows XP on-disc encryption use.
I state the following words of caution from the perspective of one who has himself been burned by non-discretionary use of both Windows XP 'private folders' and folder encryption.
The things that make XP encryption great are, unfortunately, the same very things which make it a bit dangerous. That is, dangerous if the data you place and accumulate on your pc is of any value. I think it's safe to assume most people would answer such a question with, "duh".
With regard to answering the XP User Accounts setup and password entry question of "Make folders private?" with an affirmative mouse click, keep this in mind. If you should ever either forget your password or for any reason cannot access your pc via the standard Windows user account method, you can pretty much kiss everything on the pc residing in "Documents and Settings" goodbye. Sure, nobody can view or modify anything within these directories without logging in via the good, old fashioned method. But....in the event that someone is you, "...up the creek". I've found over a number of years it's USUALLY best just to answer the "Make folders private" question with a mouse click of negative intent.
Encrypting other directories and/or files via the manual Windows XP encryption method is basically the exact same thing. The only difference is the above mentioned user account encryption automatically decides which directories will be protected. The manual method just enables the user selection of those folders to be encrypted. I personally make solid use of the manual folder encryption method, primarily for things like password storage for online accounts, etc. Once again, just keep in mind the data can be snatched from your desperate keyboard molded fingers if you should ever lose access via the XP user login process.
In all fairness, it is possible to backup the XP encryption keys in case the unthinkable occurs. However, plan on some head scratching while discerning how this is to be performed, and then again when attempting to determine whether the disc in your hand containing the backed up keys is actually valid.
Sound advice for the novice folder and file encryption junkie.
