To keep casual snoops away, just make sure that you're the only 'admin' on your PC and have a second account for everyone else. Keep sensitive stuff under 'My Documents'. Someone can still come along and boot from a CD or another hard drive which will allow him to access everything.
If you're paranoid, you could dual boot and have all of your sensitive stuff in a second, fully encrypted partition.
So move the folder into my docs, create accounts for the other person/people, then password protect the account remembering to set the make my files private option.
Just make a hidden folder in C:\Windows\System32 called something that at a glance would just look like a normal Windows system folder. Nobody will ever find it!
He didn't ask for encryption and so long as the default admin account is locked down it should be secure enough, if he needs more then I'd suggest keeping the files and a USB stick.
Store the files in a SQL database: Convert the file to a byte array and then run it through a 256bit encryption algorithm, before inserting them into the table as an image.
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