Turn off the Indexing service (Control Panel>Administrative Tools>Services; scroll down to, double click on Indexing, click the Stop button, try moving the files again). That fixes the "file in use" most of the time.
If that doesn't work or you get a message about "access denied" and something about "permissions," follow the steps in the MS KB article,
How to take ownership of a file or folder in Windows XP to get to your files.
The "Read only" setting on folders is meaningless and Windows ignores it. Check any folder (not file) on the drive and you'll see they're all marked "read only." Nobody but Microsoft programmers know why.