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Make this folder private is grayed out
In order for this option to work in Microsoft Windows XP home you must meet the below requirements.
1. The hard disk drive must be formatted in NTFS and not FAT32. Additional information about determining the type of file system your hard disk drive is running can be found on document CH000713.
2. The folder you're attempting to encrypt must be in your own personal folder. For example, if your name is bob, you must be encrypting a folder that is or that is contained within the below folder:
C:\Documents and Settings\Bob\
You cannot encrypt any folders outside of this folder. If you wish to encrypt outside this folder see the below other security solutions.