Here’s a nice (but quite unknown) feature that will help you increase your File System security in Windows XP.
XP features a component named EFS (Encryption File System), that lets you encrypt files on your PC hard disk. EFS is specially useful in situations when you share your PC with other people.
There are a few required prerequisites in order to have the encryption functionality working:

• The file you wish to encrypt should be stored in a NTFS volume, as FAT doesn’t support the EFS feature
• Your system version should be different from Microsoft Windows XP Home Edition

Here’s how you actually encrypt your files:

• Click Start || Programs || Accessories || Windows Explorer.
• Locate the file that you want, right-click that file, and click Properties.
• On the General tab, click Advanced. The Advanced attributes screen will open up.
• Under Compress or Encrypt attributes, select the Encrypt contents to secure data check box, and then click OK.



• A warning message will open up. Choose whether you would like to encrypt the entire folder or just the file



Note that from now on, other users trying to open the file will receive an error message.

Important Note

When you encrypt your first file in a PC, a key pair is generated. The key pair consist of a public and private key. If the key pair is lost or damaged you won’t be able to access your encrypted data.

Thus it’s extremely important that you follow the procedure specified in section How to back up your certificate in the Microsoft Best Practices for encrypting files.