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The proliferation of removable, high-capacity storage devices and fast data connections, such as USB and FireWire ports, make controlling data transfer at the desktop a major security issue. The threat of uncontrolled portable media devices is of particular concern because they can be used to remove confidential files from the network, bypass security systems and introduce malicious software.
As always, layered security is the best way to protect your data, and at the heart of your defenses has to be strong authentication and access control lists so you know who has access to what data. When using Windows, this requires that all data be stored on NTFS drives, which also allows you to encrypt sensitive data. With regard to your PCs, keep their cases locked and maintain control over physical access to them. They should all have the BIOS set to only boot from the hard drive to prevent users from booting them to an operating system stored on a portable device. The BIOS should also be password protected. You can use the Windows device manager to disable unwanted ports, such as FireWire or Bluetooth, to prevent their misuse. Your security policy should cover and restrict the use of privately owned devices within your organization, and where portable devices are allowed, the policy should state the need for passwords and encryption of any stored data.
If you are managing this problem at a large organization, you might want to look at DeviceLock. This allows administrators to lock out unauthorized users from USB and FireWire devices, WiFi and Bluetooth adapters, and CD-Rom and floppy drives. It can also control access to devices, depending on the time of day and day of the week. More information is available at http://www.protect-me.com/dl/.
Regarding encryption and password protection for removable storage, there are several products available. If you do need to share sensitive information using removable media and don't want to force recipients to have to install special software onto their PC in order to access the data, you could use something like encryptX SecurDataStor (http://www.encryptx.com/products/securdatastor.asp).
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