If a file is in use by an application, another application cannot modify it. Files stored on read-only media such as CD-ROMs cannot be modified by applications either. Files that have the read-only attribute set should not be modified by applications, but can be if you have the necessary security privileges to remove the read-only attribute.
If you use EditPad to open a file that is already in use by another application, stored on read-only media, or has the read-only attribute set, EditPad will open that file in "read only" mode. This is indicated on the status bar. Where you normally see whether the current file has been modified or not (the indicator shows "Modified" or shows nothing), you will then see "Read Only". A file that is in read only mode cannot be edited in EditPad.
You can turn off "read only" mode by clicking on the "Read Only" indicator on the status bar. If the file is in use by another application or stored on a read-only device, however, you still won't be able to save it even if you can edit it in EditPad. To save your changes, either close the other application that is using the file and then use File|Save, or save your changes to a new file with File|Save As. If the file was opened as read-only because the read-only attribute was set, EditPad will attempt to remove the read-only attribute if you try to save the file.
The File|Open screen has a "read only" checkbox at the bottom. If you tick that, EditPad opens the file as read only, even if the file is perfectly writable. In that case, clicking the "Read Only" indicator on the status bar makes the file editable, as if you had opened it without using the "read only" checkbox.
If you have a file open that is not read only and it doesn't have any unsaved changes, you can make it read-only by clicking the blank space in the status bar reserved for the "Modified" or "Read Only" indicator. This only prevents accidental changes to the file in EditPad. EditPad does not set the file's read-only attribute, nor does it prevent other applications from modifying the file.