SQL Server conforms to the strict definition of a Serializable query. That is, there must be a result that can logically be generated IF both queries ran in serial order - Transaction 1 finishing before Transaction 2 can start, or vice versa.
This results in some effects that can be different than you would expect. There is a great explanation of the Serializable isolation level over at SQLPerformance.com that makes clear some of what this logical serializability ends up meaning. (Very helpful site, that one.)
For your above queries, there is no logical requirement to prevent the second query from reading the same row as the first query. No matter in what order the queries are run, they will both return the same data without modifying it. Since the Query Analyzer can identify this, there is no reason to place a read lock on the data. However, if one of the queries performed an update on the data, then (warning - logic assumption here, since I don't actually know the internals of how SQL Server handles this) the QA would set a stronger lock on the selected rows.
TL;DR - SQL Server wants to minimize blocking, so it uses logical analysis to see what types of locks are needed for a serializable isolation level, and it (tries to) use the minimum number and strength of locks needed to achieve its goal.
Now that we've dealt with that - there are only two ways that I can think of to lock a row so that no one else can read it: using XLOCK + TABLOCK (locking the whole table - not a recommended practice) or having some form of a field on each row that is updated when you start your process - something like an SPID field, or a bit flag for Locked. When you update it within your transaction, only SELECTs with NOLOCK hints will be able to read it.
Clearly, neither of these are optimal. I recommend the "This row is busy - go away" flag, as that's probably the approach I would take for an (almost) absolute lock on a row.