In case you use Time Machine in Leopard and were wondering how it worked: the default for Time Machine is to backup your data to an external drive, with no encryption or protection at all. Essentially, this means anyone with a Mac can grab your external drive and use their own Time Machine to restore your data to their own computer.
It seems possible to enable FileVault encryption for use with Time Machine, but it also seems pretty messy, and only works if your entire home directory is encrypted.
Some details are given in this MacOSXHints.com article: “How to use Time Machine with FileVault“. Apparently, even when it’s working, Time Machine backs up FileVault volumes only at the moment when the owner of the volumes is logging out [what?!?].
By the way, speaking of FileVault encryption, here’s an interesting claim by VileFault, which is software hosted by Google Code: “VileFault decrypts encrypted Mac OS X disk image files.” Don’t believe it? Have a look at this presentation, which includes a demonstration of cracking a FileVault volume with “VileFault”, or this Chaos Communication Congress session on “Unlocking FileVault” via reverse engineering.
What does all this mean? Well, if you lose your Time Machine external disk, or it gets stolen, and even if you’re using FileVault encryption, it means … All your Time Machine are belong to us.