Hide Folders Using The “Tiny” M Hide Folders
It is always a better option to hide your folders from those who do not deserve to see your files but deserve the access to your computer. There are many applications who do the job for you but they go on to use a lot of space in your system.
M Hide Folders is a similar application which is real small in size (the setup is less than 300Kb and installation is around 800Kb) and it does the job of hiding your folders fairly well.
To hide the folder use the “Hide” option on the main application window, browse for the folder and hit “Hide Folder/File”. At this stage there is a little trick you have to keep in mind. M Hide Folders asks you to remember the path to the folder you are hiding. The request is pretty imperative, but do not worry, you can obtain the full path to the directory by reading the log file as long as you do not forget the master password.
To unmask the master password press Ctrl once. Press the Ctrl key again and the password will be masked again.
Revealing hidden folders is fairly easy. “Show” window comes with an option for showing the log file (contains the path to all the folders that have been hidden at one time or another). And one for entering the path of the folder to be shown. Though there isn’t much to do, there is a downside. You cannot paste the path from the log file into the folder path.

Hi Salman,
In fact, I had posted about a fun tip to hide your folders with Windows XP itself. You may like to check it out and leave your valuable comments here.
http://webtoolsandtips.com/tips/create-invisible-folder-to-hide-important-files/