How come I'm allowed to reboot a computer that I don't own, put in a USB, boot ubuntu from it and then access all files stored on the drives available (even critical files such as system files on C drive in Windows)?

Isn't there a way to prevent people from doing this, without putting up a password on the BIOS?

The file and folder/directory permissions on an operating system are managed and enforced by... you guessed it right, that operating system (OS). When the operating system is taken out of the picture (booting a different operating system), then those permissions become meaningless.

One way to think of it: You hire a big bodyguard (OS) to protect your house. You give him a list (permissions) of the allowed guests (users) and which areas (files and folders) they're allowed to visit. How useful are those lists when the bodyguard is asleep (not booting from that OS)?

Generally, it is assumed that once an attacker has physical access to your system, they own your system. Even a BIOS password won't help you in this case. One way to solve this problem is using full-disk encryption using software such as TrueCrypt, Bitlocker, and others.

The problem, in your case, is that you'll have to setup a password (or key) to be inputted whenever you reboot the system. Weigh in your options and decide.
