NTFS drives are encryptable, but not automatically encryupted. If you use XP Pro it has an ability to encrypt, but you have to do it. XP Home does not. You have to use an outside program such as True Crypt, or a host of other freebies.
I move my USB NTFS Hard Drive between my desktop and laptop without any problem and can read and write on either computer.
If you give your neighbor an un-encrypted NTDF drive he will be able to read it on his computer.