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Is there a way to prevent users from copying files in a directory on the local file system to somewhere else – including removable media (e.g., "thumb" drives) or to another folder in the same local file system?

Solutions aiming at Windows 7 are preferable, it would be great if I can also limit the directory to be accessible (readable) only by a specific .exe file.

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Does the user have a need to access (read) these files at all? – haimg Jun 10 '12 at 5:08
Yes, to be exact, they can only read them. – Tom Jun 10 '12 at 5:10
If they can read them, they can copy them, period. Copying is an act of reading a file, creating a new file somewhere else and writing the contents you just read into that new file. – haimg Jun 10 '12 at 5:11
Thank you haimg, how about allowing them to access(read/copy) the files for 5000 milliseconds then disable the whole directory again? – Tom Jun 10 '12 at 5:13
Couldn't you just disable access to everything else? Might end up being simpler. – Journeyman Geek Jun 10 '12 at 5:28

EDIT: It would be great if I can also limit the directory to be only accessible(readable) by a .exe file.

Encrypt your files and use your .exe file to decrypt and display contents.

Or use some similar method to restrict access, for example through some service that has access to files and then connect your application to that service. For example, many web services works just like that: users can see contents but copying source files is not too easy.

Of course everything that can be viewed somehow can also be copied somehow, all you can do is making it harder or not worth to do it.

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