I think that this is actually a fairly good overview of the privacy settings on Facebook and how you should set them:
How to secure your Facebook account
Roger
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Roger Halbheer
Roger Halbheer is an Executive Security Advisor at Microsoft in EMEA acting as a trusted advisor to CxO. Before that he was a Managing Director at Accenture's Financial Services. Before joining Accenture, he was the Chief Security Officer of Swisscom (Switzerland's largest telecom provider) and the global Chief Security Advisor for Microsoft.