I've been a Google Desktop user since early beta and I love the tool, but to my amazement, Google Desktop search results included my password protected AND encrypted Microsoft Excel files.
The release version of Google desktop now includes an option not to index password protected files, but the fact that they were even able to look at those files blows me away. My reason for encrypting and password protecting those files was because I didn't want anyone else to access its contents, but if Google's tool can access the content, then so can everyone else!
I consider this a major security flaw in Microsoft's Office products.