Could always move everything to a 2gig flash drive and hide it in your parents car (Nobody would ever look in the trunk for a flash drive ;D)

Check under the "Sharing" Tab when you go to properties. My XP also has no "Security" Tab when you go right click -> properties, but it has the option to hide your folders under the sharing tab. You'll need to password protect your account first.

What do you honestly need to hide that bad? It just seems odd to me..

He obviously doesn't like this person, and he doesn't want his privacy invaded. Some people have some pretty personal stuff on their computers. Some don't.

Porn, hentaiz, nuuds of his girlfriend (If hes straight we hope). All those pictures off 4chan, roms, cracks, isos, cdkeys, passwords, hacking tools, vb6, cs2, fl6...Idk ;o

Oh wait I shouldnt have said that

If I don't get the file permissions working I'm going to go with the compression/encryption method mentioned.

To answer all the "what are you hiding" questions: I use this computer daily and have so for quite some time, I'm still finding stuff I thought I deleted a long time ago every now and then. Though its probably bad that its so; all my passwords, CD-keys to games I still have working CDs for, school work, personal projects, often used programs(quite a few), some financials, and other items are stored on this computer. To me, having access to all of that gives someone a pretty good view into my life, so the less he sees the happier I am.

Man, you act like this guy is the Godfather or something, and since you couldn't pay your protection money you have to let him borrow your computer
I guess I'm an odd case, since I have virtually nothing to hide on my computer.