Windows XP is based on the same platform as Windows 2000, and shares that operating system's robust file security options, at least when using the NTFS file system. Unfortunately this security system, which enables an administrator to decide exactly which files and programs any given user will have access to, is not actually implemented by default in Windows XP. This is a concession Microsoft made to avoid confusing basic users of XP Pro, and to cripple XP Home.
The NTFS file security options can be enabled easily enough in XP Pro, but are apparently non-existent in the Home version. Fact is, the tools are there, you just need to look a little bit harder.
To enable NTFS file security in Windows XP Home: First you need to assure that at least your main hard drive is formatted with the NTFS file system. Restart your system. Just after the memory and BIOS check screen, but before the Windows splash screen comes up, press F8 a few times.
When the Windows boot menu appears, select 'safe mode' from the list of options.
Once Windows has loaded in safe mode, right click the folders and files you would like to change access to. You will notice that the 'security' tab now exists, and thus you are allowed to assign or deny access to individual users for each file, folder and program. Once you are done, restart Windows normally, and your changes will be enforced.