Use IPSec to create a point-to-point tunnel that encrypts data transferred through it. This is really easy to do in Windows Vista because IPSec is integrated into Windows Firewall and it's just a matter of creating a connection rule on each machine. See chapter 27 of the Windows Vista Resource Kit for more information on configuring Windows Firewall and IPSec.
Mitch Tulloch is lead author for the Windows Vista Resource Kit from Microsoft Press, which is THE book for IT pros who want to deploy, maintain and support Windows Vista in mid- and large-sized network environments. Mitch is also the author of Introducing Windows Server 2008, the first book from Microsoft Press about the exciting new server platform. For more information on these and other books written by Mitch, see www.mtit.com.