This is true only if you are in Windows. Panda will protect because it is
installed and monitors action only when Windows is running.

In Wubi, Windows is not running. Wubi accesses a file on the C:\ drive that is
put there while you are in Windows, but it is mounted as a device before Windows
boots, similar to a partition except that it is not a partition but a file that
is treated as one. This is what a loopback device does. It could just as easily
be used to mount an ISO file.

See: http://en.wikipedia.org/wiki/Loop_device

You are right that Panda will protect the file while you are in Windows, but it
is unclear about how useful this is since it can be damaged in other ways due to
the nature of the Windows file system and the sheer size of the file(s) which
rests on the NTFS file system. Files can be truncated and corrupted in a number
of ways. Viruses may be the least of your worries if you are relying on Windows
to protect your files.

I know that you are not of the same mind on this as I am. However, no file
system is perfect and as systems go, NTFS is better than FAT32, but not as
durable as a fully journalled fs, such as ext3 or Reiser. And while Windows
crashes are much reduced over the past, they still happen.

I personally would be hesitant about using Wubi installed Ubuntu for anything
other than the novelty and simplicity in test driving it. I have had enough
experience with NTFS and with VMs to know that when everything is stored in a
very large container, problems can become magnified. If you damage the file, you
don't lose one file, but everything!