All MS Windows programs create (and usually automatically delete) temporary files in the normal course of operation. There is no way to prevent this from happening.
One type of temproary file that I have found that doesn't automatically get deleted is an attachment opened from within Outlook. Because the attachment physically resides elsewhere, the program which can open the attachment must create a local copy of the file before it can open it (sometimes in a folder named OLK, sometimes inthe Temp foder depending on the version of Windows and the version of Outlook). This file is not usually deleted automatically. Yes, you can redirect the Temp folder anywhere you want, but that isn't the root of the problem.
If more than one person knows a given user's password, then there isn't much concern for security to begin with. With a user's ID and password, you can get to these temporary files no matter where it no matter where they are located. That would be one place to tighten up security if there is concern about access to confidential files.
Is the temprary folder necessary? It isn't necessary that it be saved, but it will be recreated every time n attachment is opened from within Outlook. That can't be changed.
How do you get around this? DON'T open attachments directly from Outlook. Right click the attachment and save to a new protected location, and then open it.
Hope this helps.