Please re-read the response to the OP.
You can "compress and set a password", but that simply makes a
compressed file copy of the folder and Windows XP's built in
compression utilities treat that like another folder for the most
part. The original data remains unless erased. You basically
made a folder into a file with a password that Windows XP *shows*
as a folder.
However - I doubt that is what the OP *or* you wants. You want to
keep it a regular folder and such for easy manipulation. I know I
would. So what you do is change the permissions on said
files/folders so that ony YOUR USER can access it.
How to set, view, change, or remove file and folder permissions in
Windows XP
http://support.microsoft.com/kb/308418