Question : Password Protected Folder Sharing Within Network

Which networking system/software do your recommend for a small business with five computers (4 windows XP home edition and one windows 98 SE) that would like to have password protected folder sharing within the network?  

Answer : Password Protected Folder Sharing Within Network

Hmmm curious why the Choice of XP Home instead of XP Pro being that this is business?

See if you had XP Pro and a Win2000 Server or Win2003 then

Quoted from WinXP News

How to Share Files Using Encrypting File System (EFS)

The Windows XP Encrypting File System allows you to secure your files against people who want to steal the information contained within them (or just view them without authorization). EFS was first introduced with Windows 2000. The problem with the Windows 2000 EFS was that only the person who encrypted the file could read it. Microsoft improved EFS in Windows XP Pro so that you can allow other users access to your encrypted files. If your computer belongs to an Active Directory domain, here's how you do it:

Right click the Start button and click Explore to open the Windows Explorer. Go to the appropriate directory and select the file you want to encrypt.
Right-click the file and click the Properties command.
Click the General tab and then click the Advanced button.
Put a checkmark in the Encrypt contents to secure data checkbox, then click OK. Click the Apply button in the file's Properties dialog box. If this is the first time a file or folder has been encrypted, a dialog box will appear asking if you would like to encrypt the file only or the folder. Select Encrypt the file only and put a checkmark in the Always encrypt only the file checkbox. You will still be able to encrypt a folder if that's what you want to do. Then click OK.
Right click the file again and click the Properties command. Click the General tab and then click the Advanced button.
In the Advanced Attributes dialog box, click the Details button.
Click the Add button in the Encryption Details dialog box.
A Select User dialog box appears, showing existing users and certificates that are cached in the "Other People" certificate store of the local machine. It allows new users to be added from the Active Directory by clicking the Find User button. A user must have a valid EFS certificate in the Active Directory to be added.
Click the Find User button. Type the name of the user in the Enter the object name to select text box, then click OK.
Click OK in the Encryption Details dialog box, then click OK in the Advanced Attributes dialog box.
Click Apply and then click OK in the file's Properties dialog box.
Now the user(s) you added will be able to access your encrypted files, as long as they also have the appropriate permissions (EFS sharing is a separate issue from access permissions). Also note that you can't use EFS on XP Home Edition machines.