basic question: what happens if my machine is stolen?

I know this is basic, but I'm a little confused. I'm hearing different things from different people. I'm hoping someone can clear this up for me.

Here's the scenario: I've got a machine running XP pro, users must login to use it, hard drive is formatted NTFS.

Here's the question: if the machine is stolen, can the files be accessed? I understand you'd have to hack the password in order to get on the machine, but would it be possible to take the hard drive out, set it as a slave on another machine and access the files that way?
hullc65203Asked:
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ComputronCommented:
yes, it would be possible. The thief could assume ownership of any permissions you set. There are also 3rd party tools to help do this.

http://support.microsoft.com/default.aspx?scid=kb;en-us;308421&sd=tech
http://pubs.logicalexpressions.com/pub0009/LPMArticle.asp?ID=173
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David-HowardCommented:
Very possible as stated above. If this is a concern of yours you might check in to removable storage devices. I recommend that to those with roommates, etc.
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tillisoncCommented:
The quickest and easist would be for them to change the Administrator password.  

There are utilities (Linux Boot / Password Recovery) that without removing the Hard drive, a person could change the administrator account within a matter of minutes and have full access to the hard drive and the data as well.

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hullc65203Author Commented:
Can I setup encryption on this drive? Doesn't XP have the ability to make files private?
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ComputronCommented:
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imnajamCommented:
Hello hull,

if your computer is stolen, you lost all your data no matter if it's encrypted or decrypted because, administrator's password of windows xp can be easily resetted, and admin can take ownership of files aswell as decrypt file.
The only way I can think is that you keep your confidential data into a zip or RAR archive and protect it with long password
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MCPJoeCommented:
My suggestion would be for mobile devices like laptops, to use some type of encryption other than Windows Encryption, I use Cryptainer LE, its free for 25MB of space.  Users could store all sensitive data on this secure "drive", and if the machien is stolen, its highly unlikely anyone will be able to get into your files.  They would be able to logon to the machine, but not much else.  Unfortunately, until more advances in mobile device security become more widespread and affordable, like fingerprint scanners, etc, there isn't much that you can do.  
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