Encrypting File System (EFS) [1], is integrated in Microsoft’s Windows platform since Windows 
2000. Additionally, Windows XP Professional, Windows 2003 Server and Windows 2005 Media Center operating systems also support it. EFS uses public key cryptography that makes use of a user’s account login and password pair to encrypt a private key. The private key is used to encrypt the original data (files or folders). Encrypting any files or folders, in the supported operating systems, is a trivial task and can be done in many ways.
Programmatically this can be achieved using calling various APIs that support file encryption like CreateFile with FILE_ATTRIBUTE_ENCRYPTED flag or EncryptFile function. Microsoft’s commandline utility Cipher.exe can also be used for encrypting directories and their contents. The result of such encryption is that only authorized user can view these files. Many businesses or home users frequently use it to encrypt the confidential data that needs to be protected from hackers, uploader trojans or somebody gaining physical access to machine. Computer Security Research - McAfee Avert Labs Blog
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