If the files were copied outside the PDM environment they would be usable yes. The PDM environment is basically a layer on top to control the workflow, revisions etc. You may for example what to do this if you were transferring data to a manufacturer or in the case of handing over CAD to a client. Any document that leaves the environment is obviously no longer under control though.
The archive vault folder on an end client machine (known as a vault view) reflects/mirrors the vault on the server (or the part of the vault on the server that a user is allowed to access). It can be password protected either using a SolidWorks PDM user account and password or set up to use Windows authentication.
Access to specific folders/files can be granted/denied on a user or group level. Access can also granted/denied using administrative level privileges.
Is this what you are after?
Yep that answers my question. Thank you.