Problem security with Windows XP...

Hi all,
excuse me for my English, I'm Italian...

My friend show me how is possible to have full access in a system with
Windows XP Professional installed (this system in always up to date with
Microsoft Update)!

1) he has erase the BIOS password, by removing the battery of PC.
2) With a boot disk and a program found on Internet, he has erased the
Administrator password and a local user password (with administrator
rights)...
3) He is enter in Windows XP with logon (user Administrator, password
blank); and has add new password for Administrator and the local user.
4) Now, he can do everything...

But is there a method to avoid all this?

Thank's
Andrea