I personally don't care for hibernate, and always turn it off. My PC stays on all the time and only the monitor goes off. And my laptop I just suspend between uses.
Maybe this preference comes from having to fix to many PCs which screwed up during or after a hibernate, which makes getting back into a Windows a chore.
And for access denied. Well, from MS: "The Make this folder private option is available only for files in your user profile (the My Documents folder and its subfolders, and the Cookies, Desktop, Start Menu, or Favorites folders)."
Note also you can right-click a file and choose properties, then click Advanced, and select "Encrypt Contents to secure data".
This only protects the folder from OTHER users. If you are in your own user (same user who encrypted folder), it will be deleted without a hitch. But if another user account tries to go in YOUR encrypted folder, I think they'll have problems.
So basically, to protect your date IN YOUR PROFILE from other XP users, you would do this:
First go in control panel to Users, and make sure your user has a password.
Next, for make private to work, you have to have Simple File sharing ON. To change this, open My Computer, click Tools-Folder Options-View and make sure "Use simple file sharing" is checked. It's at the bottom.
If you don't use simple file sharing, you'll have to set these permissions manually.
Then go in My Computer - C: - Documents and Settings -> Right-click your user folder and choose Properties or Sharing and security. Then on the sharing tab, you can select to make folder private. This will hide EVERYTHING in your profile from any other user accounts. Sometimes this is not desirable though, it can be better to just create a single, private, folder for those files, and leave the rest open. But you can only make private folders in your profile, not outside.
So then, hope that wasn't to wordy. But if you just want to password protect a folder or two, and you have users which share your user account, I would find a 3rd party encryption program. Maybe somebody can recommend one cause I don't know any offhand that are good.