Password protection (network authentication) is significantly easier and less error prone. Password protection also allows you to restrict access per share rather than restricting all access to all shares on the system.
It can be done via IPSec, but (at least historically) IPSec on Windows is ridiculously complex and is generally considered a tremendous waste of time for the benefits you get. I've never seen anybody actually use IPSec before except on production servers.
You can also configure the firewall, but this is only slightly less cumbersome. Open Control Panel --> System and Security --> Windows Firewall --> Advanced Settings. Make sure Inbound connections are default blocked (this is the default setting). Then, click on Inbound rules. Scroll down until you see "File and Printer Sharing". The ones that should do what you want are NB-Datagram-In, NB-Name-In, NB-Session-In, and SMB-In. I don't believe the others are used for file sharing. For each of those, double click the rule to open the Properties Window. On the Scope tab, add the IP Address in question to the list of allowed clients. This should prohibit any other IP from accessing all file shares on this computer, but you should test it.