When I distribute .exe files, I use my Active State Dev Kit to make the .exe. This license does cost money, a major downside. I am not aware of a freeware solution that provides the same level of "source code security".

A determined hacker can indeed find the source code in an Active State executable, but this is not trivial. The average guy out there cannot do it. Due to a massive server meltdown on multiple machines, I lost the source code for one of my Perl.exe's. I eventually gave up and wasn't able to recover the source code although I had a current .exe. There is a way to do it and it has been done however, it is not "easy".