Sandboxie is a small utility which allows protecting hard drive of your computer from malicious activity of other applications.
Here is a diagram from official site which explains how it works:
Sandboxie prevents applications from writing to your hard disk, i.e. viruses, trojans and malware wont be able to modify your system. It is also an excellent protection tool for Internet Explorer.
Sandboxie reached version 2.62. The changelog is available on Sandboxie version changes. Sandboxie is available free of charge.
Please read a short Sandboxie Guide if you decide to try it out.