Step 1: Create an additional partition and format it. Windows Vista and 7 users can use the Shrink Space option from the Disk Management Utility to create a new volume without repartitioning the hard drive. Windows XP or older users can use third party partition manager utilities to create a new partition. If you already have an additional partition or drive, then you can skip this part. Once you have created the partition, format it and transfer all your data to this new drive
Step 2: Now let’s assume that you have your sensitive data on drive ‘D’ and want to prevent it from showing up in the Windows Explorer. To do this you need to start the Group Policy Editor utility. Click ‘Start | Run’ and type ‘Gpedit.msc’ and press [Enter]. Here scroll down to ‘User Configuration | Administrative Templates | Windows Components | Windows Explorer’ on the left pane. Double-click on the ‘Hide these specified drives in My Computer’ on the right pane. In the following window, select ‘Enabled’ and choose the ‘D’ drive from the drop down list under ‘Options’. Apply the settings and exit.
Step 3: The drive letter ‘D’ is now hidden from Windows Explorer. In order to access this drive in future, all you need is to enter ‘D:’ in the ‘Start | Run…’ dialog box nor in the address bar of Windows Explorer. Your drive will be accessible for your work since only you know it exists.
Note: This is not a fool-proof method and the hidden drive can even be targeted by viruses. Also, remember that this is not an encrypted partition. The lists of recently opened files in each program can also expose the hidden drive’s existence. Use a utility such as Ccleaner or Window Washer to wipe out these tracks.