Does Home edition of windows 10 encrypt files?

Can I encrypt Windows 10 Home edition?

You can use device encryption. There are some requirements:

Device encryption requirements

These are the hardware requirements for device encryption on Windows 10:

• Trusted Platform Module (TPM) version 2 with support for Modern Standby.
• TPM must be enabled.
• Unified Extensible Firmware Interface (UEFI) firmware style.

Checking device encryption support

To see if your laptop or desktop computer meets the requirements for device encryption, use these steps.

• Open Start.
• Search for System Information, right-click the top result, and select the Run as administrator option.

• Click the System Summary branch from the left pane.

• Check the "Device Encryption Support" item, and if it reads Meets prerequisites, then your computer includes support file encryption.

Source How to enable device encryption on Windows 10 Home | Windows Central

But what if we are using home edition? A password can prevent entry into the OS, but if one could still connect the hard drive to another computer so that the files in it could be read without knowing the password, then the data were not really securely protected.

You can use something like Veracrypt or Device Encryption if you want to use native Windows functionality. Device Encryption has specific hardware requirements in order to use it. If you are unable to enable it then your device does NOT meet the requirements. Device Encryption is required by Microsoft to come enabled on ALL OEM hardware.

At the bottom of the System Information window, find Device Encryption Support. If the value says Meets prerequisites, then device encryption is available on your device. If it isn't available, you may be able to use standard BitLocker encryption instead.

Windows 10 Home doesn’t support EFS (Encrypted File System) which could be used to encrypt your user profile without using FDE (Full Disk Encryption).

So, does the password set on windows 10 protect files?

Anyone with physical access to your machine and Administrator access on their own machine can access your files unless a FDE (Full Disk Encryption) is used.

Could someone circumvent the password by connecting the hard drive to a different computer or installing another copy of windows?

Yes

Is the situation different for windows 7?

Yes; Windows 7 does not support BitLocker unless you are running Windows 7 Ultimate. Windows 7 doesn’t support Device Encryption.

Is the situation different for C:/(system) and D:/?

Anyone with physical access to an unencrypted partition can access that partition.