Encrypting files in XP is actually pretty easy. EFS (Encrypting File System) is built into your OS. Protect your files from other users.
1. EFS only works on the Windows NTFS file system.
2. EFS does not run if there is no recovery agent certificate, but it does designate a recovery agent account by default and generates the necessary certificate if you do not.
3. Use EFS to encrypt or decrypt data on a remote computer, but you cannot use it to encrypt data sent over the network.
4. You cannot encrypt system files or folders.
5. You cannot encrypt compressed files and folders until you decompress them.
6. Encrypting an entire folder ensures that the temporary copies of encrypted files that it contains are also encrypted.
7. Copying a file into an encrypted folder encrypts the file, but moving it into the folder leaves the file encrypted or unencrypted, just as it was before you copied the file.
8. Moving or copying EFS files to another file system removes the encryption, but backing them up preserves the encryption.
9. Other file permissions are unaffected. An administrator, for instance, can still delete a user's EFS file even though the user cannot open it.
Backup your certificate keys to EFS! If not, your data will be useless if you ever need to recover your system.
STEPS IN USING EFS:
1. Right-click the folder you want, and then click Properties.
2. On the General tab, click Advanced.
3. Select the Encrypt contents to secure data check box, click OK, and then click OK.
4. Click Apply changes to this folder only or Apply changes to this folder, subfolders and files as appropriate.