on my old phone, the "Private" setting on a Contact meant that in order to view the details or edit the Contact, then you would be prompted to enter your password.
I have marked these Contacts "Private" on my BB Curve 8310, but they open just the same as any other.
You can't. It's assumed that if you can access the BB, then you have rights to access everything on it.
The "Private" setting is simple a filter option...you can assign some contacts the "Business" flag, and some the "Private" flag, and then filter your list for one or the other (or any custom ones you want to create).