Since Windows 2000, professional editions of Windows have included the Encrypting File System (EFS), which can encrypt files and folders. However, there’s much more to be worried about than encrypting just the sensitive documents. Your Windows account and system settings can be just as sensitive, containing passwords to networks, shares, email, and online accounts. Your documents, browsing history, and any other files not encrypted are vulnerable. When your entire Windows volume isn’t encrypted, these can be retrieved without your Windows password or without even booting into Windows.
If running the Ultimate or Enterprise editions of Windows Vista or Windows 7, you can use the BitLocker Drive Encryption tool to encrypt entire volumes, including the Windows volume. If you don’t have these premium editions, or are using Windows XP, you can use third-party encryption solutions. DiskCryptor is one solution that lets you encrypt existing system volumes without formatting or reinstalling Windows.