You can not change the file or folder permissions in windows xp home. You are limited to "Simple filesharing". But there is a workaround.

Instructions:

  1. Restart your computer in safe mode
    How to: Hold down the key F8 during computer startup
    Select safe mode
  2. Use your administrator account in safe mode
  3. Find the folder whose permission you want to change
  4. Right click on folder and select properties
  5. Change permssions
  6. Click ok!
  7. Restart computer

More articles:
Windows xp: How to use your computer on daily basis with user accounts

How to disable simple filesharing in windows xp pro or Windows media Center 2005