I just went through the process of sharing my game library with a friend, I noticed that it is something that can be hard. I am going to make a Guide to doing this, because it's still fresh in my mind. First, I'll include some links from steam that should help, then I will explain the surface as much as possible. 

http://store.steampowered.com/promotion/familysharing  This is really helpful. It explains why/ how you can!

https://support.steampowered.com/kb_article.php?ref=3784-QLBM-5731 This is a type of FAQ

First I'll explain what I mean with account/ library sharing. This can be done, without them having permanent access to your account. They can earn achievements, save game progress etc. You ultimately purchased the games, but it is they that can play your games, under the condition that they are connected to the internet. You must give your password, or if you are there, you can type it in yourself. (Only do this with someone you trust with your password!) They must install the game, and then open it from their account. It will recognize who the game belongs to, ask if they want to have you share your account. This will send an E-mail to your address. If you permit them to do that, they will have access to all of your games. If I miss anything, please notify me!

Pros: 
You can share the experience with your friends.
They don't have to dish out extra money for a game that they are unsure of.
You can share with them, they can share with you.

Cons: 
They have your account, at least temporarily.
(You aren't supposed to be able to play together.) I will test this, and update the thread.

How: 
Enter Password, and other login info. Check E-Mail to verify the location. Enter Code in Steam. Go to Library and begin installation phase. Once complete, log out! Log into the other account, and boot the game up. (I am not really sure about this part, as my friend did this part.) You should have a message telling you to ask about account sharing. Check E-Mail, verify that you want to share! This should put ALL of your games in their "Borrow" thing. (They don't have complete access to everything. They can use DLC that you have, but can't purchase DLC for the game.) That's it!
Edit: You need to do the email thing twice. (As supernerd said below.)

supernerd117 :  
zombie-batman: Did I forget anything, or not do a step right? Anything to add?

I always wanted to share an account with someone when I first started steam, but I dont really have the need anymore. Sounds like a cool feature though.
Can't you keep your email password and steam password different so they cant take your account? Or change the password when they install one of your games the first time?
zombie_batman:

earthwarrior : You could change your password when doing the account sharing. I would suggest that you DON'T give your E-mail password, just give the authentication code to them... And yes you can keep the passwords separate. (This would be much better) 

zombie-batman: I can't summon you here, it's failing!

darthyoda : You got it all right, except one thing. In order for both people to share between accounts, the email step must be done twice, once from each account. Each person must receive an email and confirm, or just one account will be able to play the other's games.

Otherwise, good thread!

supernerd117 : Thank you! I'll edit that into the guide. 

zanderlex : With your permission I'll sticky this.