OK, some useful feedback:
After researching a bit I found TrueCrypt
http://www.truecrypt.org/ which does what I want: a virtual lock box/vault that I can drag and drop files.
From what I saw, TrueCrypt is THE best open-source utility out there for file & folder locking app. Even better, it's truely free. The only other utility that appears to be in the same league with TrueCrypt is the glitzy commercialized "Folder Lock"
http://www.newsoftwares.net/folderlock/. But this will set you back $35 USD.
TrueCrypt is simply awsome. The author said he'll never comercialize TrueCrypt to stay true to the open-source spirit. But you're welcome to donate--This piece of work absolutely worth every single penny there is to count.
Last but not least, beware of free trojans out there. They can come loaded with snoopware and done stealing critical data from your computers before you finish yelling "Hot dangit..."