I dont know how to do this

I want to build an application that checks every second for certain windows and then react according to that.

My Goal:
I'm building the application for a pc in a Students Home with about 10 users. To create 10 different user accounts for windows will be annoying and crowded, because new people come in every year(or couple of months) and then old accounts have to be deleted and new ones created.

I want to build an application that accepts folderPaths or window names.

Lets say user1 creates a folder with the name "Susan" that she wants to protect (her personal files/picture/work will be stored there. She opens the application, selects the folder. The application saves the folder path and her password that she enters.

If the application detects that a user is trying to open/move/delete/copy/whatever that folder, the app must pop up a password box. Correct password gives her the freedom she wants, wrong password just ignores the open/move/delete/copy/whatever command.

Is it possible to do this?

My post is a bit offtopic but check TrueCrypt (www.truecrypt.org).

TrueCrypt has the needed functionality. It's written in .Net Framework and it's an open source project. It creates basically - a big file which then is represented as disk. Basically what you have to do is to create such disks for each student and let them provide username/passwords for each.

Check http://www.truecrypt.org/

All is good, but that is exactly the process they want to bypass (creating "big" things, like users or discs).
I still cant see why they need privacy when they have flashdrives that can be password protected, but she wants me to develop this little application for her, so she can sell it. For some reason she sticks to her folder plan.

Where do you think would be a good place to start?

The protected files can be held in some secure container (like TrueCrypt does) or you should rely on the system protection means. User rights management is a easiest way to do it.
Any other protection would have flaws. Who's going to guard your 'protection program' itself? Another program? You can watch the folder (FileSystemWatcher component can help it) and prevent other users to modify the data, but if these files don't have NTFS protection all it takes to access them is killing your application process. I'm afraid that either you should manage users on the machine/network and assign certain permissions for each folder OR you should use secure containers.

There are 3 applications in total. The "fire app" this one starts the other 2. They constantly check if the other is running and if not it starts it. Not the best way, I know, but its the quickest to code. And these students wont be smart enough to figure out what is going on.

So you think FileSystemWhatcher is my best bet?