How can I protect my data when lending my computer to someone?
Solution 1:
You are correct. Someone could still access your data through a livecd. You should take a look into encrypting your home directory. They ask you to do it when you install ubuntu but you can also do it after the fact. Here is some information to help you: https://help.ubuntu.com/community/EncryptedHome
The information on that page is good for Ubuntu 8.10 and newer.
Basically you need to do this
1) Make sure you have ecryptfs-utils (sudo apt-get install ecryptfs-utils)
2) Add a new user with an encrypted home - (sudo adduser --encrypt-home)
If you have any more questions or run into problems just reply :)