It depends upon version of Windows you are using.

Windows 9x/XP/2000/NT
Windows 9x/XP/2000 NFTS do not support permission that hides the folder or files. Your users can view the contents of any folder for which the user has the list permission.
If your remove the list permission for folder then user are prevent gaining access to any file in the folder.

Hiding network share
If you would like to hide shared folder (network sharing) then append $ at then end of share name, this hides folder in network browsing.


Hiding folders/files under Windows 2003 SP1
Microsoft has introduced new feature called Access-based Enumeration (ABE) and it is only includes with Microsoft Windows Server 2003 Service Pack 1 (SP1) to increase security around file sharing, reliably streamline large directory structures.

ABE filters shared folders visible to a user based on that individual user’s access rights, preventing the display of folders or other shared resources that the user does not have rights to access.

How do I use ABE to hide folders under Windows 2003 SP1?
(a) First you must have SP1 installed.

(b) To use the ABE GUI, right-click on a shared folder and select Properties. The Access-based Enumeration tab of the Properties property sheet offers two options for enabling ABE. Select the option you want.

Once it (ABE) is enabled on shared folder user would now see only the files he/she has permissions to view.

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