Yesterday I covered encrypting a single file in Windows XP, however what if you want to encrypt your entire disk? Rather than using the built in Windows XP tool, try using the open source application, TrueCrypt.
With TrueCrypt you can protect your entire disk contents with a virtually unbreakable password. Simple and to the point. If you want to know more about this application, check out their FAQ section as the program is very straight-forward with what it does.