Maybe I am not explaining to well, or I don't understand how it really works. I have my electrum wallet inside a folder named folder A. Inside folder A is another folder created by electrum. In that folder is my wallet file.
Yep.
Great.
Yes, without the password they can see your balance etc, information about the transactions you received. But without the password or(!) the seed, the coins can not be spend. The seed allows you to create a new wallet (without password) with the same private keys. The password unlocks the allready existing private keys.
In my personal opinion it is not helping if you encrypt the folder. The file is encrypted allready, if you wanted to add another layer, Id suggest you protect the system itself BIOS&boot password, fully encrypted disk or at least protect the user account that has access to the file by setting a userpassword if you dont have one allready.
All these methods would protect the folder as well as the file inside it indirectly, as anyone that would have access to your machine would need at least one of those passwords to operate it or time.
E.g. if you only set a userpassword this can be circumvented by booting from an external device and extract the data that way.
If you also have a boot & bios password, its not possible to boot from an external device, so an attacker would have to dismantle the machine and remove the harddisk. Once the harddisk is in another machine the file can be read.
If the harddisk is also encrypted, well sucks to try and steal your bitcoin. You are still vulnerable to viruses / keyloggers, social engeneering as well the 5$ wrench and drugs attack [1] however.
A encrypted folder would also buy you more time to notice something is wrong, but it would also result in manual steps. You would have to decrypt the folder with a tool, start electrum, do what you want to do, close electrum, encrypt the folder with a tool. While an encrypted disk can be handled by your OS automatically (besides entering the password ofc). I know this works perfectly fine on a linux machine and suspect its also possible for Windows and MacOS nowadays.
[1] https://xkcd.com/538/
So they can just steal my wallet file, and put it inside another wallet of their choise, like it doesn't have to be electrum, and then they are not able to spend/move my bitcoins right? If this is the case, I shouldn't be worried about the wallet file, and if someone steals it, they can't do anything with it because they dont have my password or seed?
But why is then everybody saying protect and backup your wallet etc..
Your suggestion of seucurity seems like a bit advanced to me, although I kind of understand what you mean.
But my wallet is on my external harddrive. If I set a password lock/encryption to the whole folder, it will make the security level go up a little bit, which is good I guess.
A few days ago I read a thread here which is now deleted, but the op linked to a website. And it said that I didn't have flash installed, so I was not thinking more than I should, and tried to download the file and install it. I already even had flash on my computer so I don't know why I did that. Later on I get a message on my screen saying electrum password expired! change it. And I didn't even had my external harddrive connected to my PC. And how they knew I used electrum, not sure. And then I realised it was some kind of trojan/malware, and I also looked in the thread and some more users confirmed this. So I deleted it and checked that my coins were safe on my computer at a later point, and they were.
But imagine if I had my external harddrive connected to my computer at that point, what could of happen? Could the malware just see my password and take my coins, or would it log me when I type my password, and then transfer the coins to themself? I guess it's better to have electrum on a external harddrive rather than on the computer it self. Becuase you could always check that your coins are safe in another computer, thats not infected with virus/trojan or malware, and then proceed to clean the computer.
Btw, I appreciate the time you take to help me understand this whole thing!