Hi. To display your photos, that are stored in the protected folder,you will Need to hard code them into the pages using <img src="URL to photo.jpg" width="300px" height="200px"> but double check my coding as I am guessing here, but it is something like this.
You will have to get the size correct or your photo will look too long or too high - stretched.
So, to do what you want, you can't use the normal wp insert photo.
A quicker way, that may not be a solution for you is to insert photos in the normal manner, and if you look carefully during the photo select procedure, you will see an option to delete the link to the photo (none). Selecting none means that if someone double clicks the photo on your page, nothing will happen, but of course visitors can still drag the photo off the page. Consider watermarking them and replacing the link to the photo to a page showing a copyright statement.
You could also try nextgen photo gallery, not sure, but I think photos displayed with this plugin can't be copied or dragged off the page.
I had problems with the latest version of nxtgen and so had to use the older previous version.
http://wordpress.org/extend/plugins/nex ... /download/