Can I password protect a sub folder under inbox in exchange

With your scenario you cannot password protect the inbox stored on the exchange server.
You can password protect the personal folders in outlook, which i am afraid will not server your purpose
http://office.microsoft.com/en-us/outlook/HA010549751033.aspx

That is true. I need to protect it so that any of the users,even if accessing thru outlook or OWA face the password protection. That is what I need the solution for.

If the users have Full Mailbox Access, then there is nothing you can do. Exchange/Outlook permission model is based on the simple fact that someone with Full Mailbox Access can do what they like to the mailbox, including access everything in the mailbox. As an administrator you cannot restrict them.

Simon.

can you set up a rule to forward on that message to another account and delete the message from the orignal folder

If you have a sub-folder in the Inbox tree, that you apparently don't want most folks to have access to  -- why do you have the folder in the Inbox tree to begin with?

Maybe an alternative to what you have, is to create a mail-enabled Public Folder instead of a mailbox. Set-up a rule on the Public Folder that would forward certain messages to a sub-folder in that tree, tighten-down the permissions to the sub-folder as you choose and it should do the job for you.

How do i make a mail enabled public folder and tighten up as u suggest?

right hand click the public folder and select exchange tasks, mail enable it and add permissions to the folder

Thks. But the problem is not solved. What I need is this:-

1) There is a common login that is used by a number of people for the exchange server. Most of the mails r for everyone to refer to. There r some from same senders which have sensitive information which all do not need to c. I can transfer the mails manually to another mailbox, but then if I need to refer to them,I need to logout from the common user,relogin into the other mailbox etc.

Is there any solution whereby I can still be logged in, in the common login and still have acces to restricted mails??