I've been using Money for some years and am quite familiar with it. My wife and I have several different accounts set up on it and find it very reliable and useful. But in answer to your question, I have recently tried to set up a separate file for my son's pocket money. The magic word is 'file' as opposed to 'account'. We didn't want him opening our file with all our accounts in it, but wanted a separate one just for his account. It is easy to set this up, but not easy to manage!
Money always opens with the last file used and then you have to select the file you want from the file menu. You must be careful that the automatic 'save on exit' doesn't overwrite the wrong backup file too. I abandoned the idea as too risky! It may be possible to manage effectively but it's not intuitive!
No, not really. All the accounts in a file are shown on the accounts page. They can be grouped under type (current, credit card etc.) and you can have some showing (favorite accounts) and some not showing (NOT selected as favorite). Anybody with access to the file can see all the accounts on it. I can see what you want to do, but it would appear that Microsoft like to encourage financial transparency within a family! Not a problem if you've got Bill Gates money - or then again!?
My version is 2002 so perhaps separate file management has been improved in the latest version. It's an excellent program, but you have highlighted the main disadvantage. I've been looking for a freeware program for my kid, but there aren't many home accounts packages to choose from and I haven't found one that's close to Money.