Seems to me that the very best possible solution is for you and your sister to set up different accounts on your Mac, actually. That's one of the real benefits of Mac OS X (and, for that matter, Windows too).
You can do that by simply going to Apple --> System Preferences... --> Accounts and setting up an account for her. Then simply ensure that you log out when you're done with the computer each time and she won't be able to get to any of your files and you'll be safe from having her mess with your preferences, settings, etc.
No? That's not what you want to do?
Okay, I'll give you a couple of neat Terminal tricks that can help you out, one that lets you make a folder closed to everyone and another that makes it disappear completely until you make it reappear.
In both cases, you'll need to launch Applications --> Utilities --> Terminal.app. It'll start out in your account "home" directory, which you can check by typing pwd. Move to the directory where your folder or files lives by typing in cd followed by the name of the directory.
For example, if I wanted to protect a folder on the Desktop, then I'd type in cd Desktop and move there.
Now, to make a folder completely locked and unreadable, simply type in:
$ chmod 000 my-protected-folder
You won't get any feedback but you'll end up with something like this (pay particular attention to the "testing123" folder and how it's portrayed):
To get back in when you want to, simply go back to the same place with the "cd" command and type in:
$ chmod 775 my-protected-folder
To hide a folder or file completely, simply preface its name with a ".". For example, to hide "testing123" I'd rename it ".testing123":
$ mv testing123 ".testing123"
Wanna get that one back to normal? Go back to the same directory and type in the reverse: mv .testing123 testing123
So there you go, three possible solutions to your problem. Hope one of them works out for you!
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I have a suggestion: what about using Disk Utility to make an encrypted disk image (just make the initial image with enough head room to accommodate the folder growing to a big size later) and password protect it.
Opening (mounting) the image would require a password each time you want to open (read from or write files to the folder). Remember to eject the image once you're done using it.
While this seems simpler for the novice user than using the terminal it would be pretty obvious to other users, or your sister in this case. But if you put the image in a place that was a little out of the way she might just mistake it for something that belongs to the system.
Just an idea..