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Format as NTFS, in a DOS window, in Windows 2000
Let's say that like example #2, your PC isn't formatted with NTFS. Also, let's say that you have no backup storage devices, and you have some large files that wouldn't fit on another partition. Windows includes a tool called Convert, which is suitable for this scenario. It does as it's name suggests, converting FAT to NTFS.
To use Convert, you need to go to a DOS window. Simply click on Start, go to Run, then type cmd. A dos Window will appear. At the prompt, type convert d: /FS:NTFS.
One of two things should happen. Either the format will proceed as expected, or it will tell you some message that the disk is in use and cannot be formatted. It'll ask if you'd like to do so on the next reboot. If you say ok, it'll reformat into NTFS next time you reboot your PC. Note that Convert is a one way trip. you cannot use the tool to go back to FAT.
So, that's pretty much it. How you're going to format it is up to you. Personally, if I didn't do it at the initial install, I'd use the convert tool, since it's the only way that I know of that you can covert your system drive without losing data.
Now that your drives are formatted into NTFS, how do you secure it? Simple, just fire up Windows Explorer by pressing Windows Key+E. Pick your newly formatted drive and right click on it.
Select properties, and a new window will appear. This is your local disk properties. Don't bother with the other tabs for now, and go straight to the Security tab. You're going to see that Everyone has full access to this drive. Typically, you should select everyone, and remove it, then add authenticated users. By default, they'll only have a few permissions. You can add more or take some away. Be sure to add yourself and make sure you have full control. Click Ok, and you'll be dropped back to Windows.
  
As I mentioned earlier, you can do the same thing to subfolders, and to the actual files themselves. Like security for folders, security for files works the same way. Right click on the file, select properties, security, then you'll be presented with the same interface as explained earlier.
Anyhoo, that wraps up my guide on NTFS security. There's a lot more to it than what I explained today, but the information I provided should get you on the right track. Don't forget that this isn't foolproof, and this does not replace the need for a personal firewall, strong passwords, and regular backups.
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