Sounds like a tricky situation that guy got himself into - i wonder if he was a director of a top company! I've done a bit a testing:-
Created another full administrator workgroup account
Logged of my original administrator account
Logged into my newly created one
Found the files that i created
Tried to access, and bingo - it said Access denied.
So, on the plus side - if my PC got stolen i dont think they can access encrypted files unless they knew my password to logon. On the other side - it seems that logging into your windows account, unencrypts them automatically. So i guess that would mean the only way they could be compromised would be through remotely accessing my PC and even at that - i wouldnt be suprised if the encryption has something built in that would prevent that aswell.