Windows provides pretty good security when it comes to protecting the data on your computer. You can restrict access and require a username and password so that only you are able to open or modify the files. Of course, if you are using the Home versions of XP or Vista your options are more limited (for some reason Microsoft feels that home users don't need as much security), and if you are not using the NTFS file system then all bets are off.
Even if you are using NTFS on a Windows XP Professional or Windows Vista Ultimate system, there are limits to what you can and can't do to protect your data. FSPro Labs has a product called Hide Folders 2009 that enables you to not only secure your data, but also to hide it. Hide Folders 2009 also works on NTFS, FAT, and FAT32 volumes and provides a variety of other features and capabilities. Check out the profile of Hide Folders 2009 to learn more and to download the free evaluation version to give it a spin.
All that compared to making a folder permissions 700 in linux.
No. Setting folder permissions to 700 in Linux is like using Windows NTFS permissions to allow Full Control for the Administrator (or Owner), and denying Full Control for all others. It does not accomplish any of the other functions that Hide Folders 2009 accomplishes- hiding folders, allowing trusted processes to access locked and hidden files, etc.