TrueCrypt
Update: You may have heard about this, but a while back the FBI/NSA/CIA/Whatever hacked the TrueCrypt code or otherwise compromised this great software. If you’re using any version after 7.1a, stop … right … now. Get rid of it, and use something else. It’s *officially* unsupported.
That said, there are dozens of new encryption tools available, many based on the original, non-compromised version of TrueCrypt. A good sample of those are reviewed on Comparitech.
Just an FYI.
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A Free open-source disk encryption for Windows XP/2000/2003
Main Features:
It can create a virtual encrypted disk within a file and mount it as a real disk.
It can encrypt an entire hard disk partition or a device, such as USB memory stick, floppy disk, etc.
Provides two levels of plausible deniability, in case an adversary forces you to reveal the password:
1) Hidden volume
2) No TrueCrypt volume can be identified (TrueCrypt volumes cannot be distinguished from random data).
Encryption algorithms: AES-256, Blowfish (448-bit key), CAST5, Serpent (256-bit key), Triple DES, and Twofish (256-bit key). Supports cascading (e.g., AES-Twofish-Serpent).
Based on Encryption for the Masses (E4M) 2.02a, which was conceived in 1997.
TrueCrypt – Free Open-Source On-The-Fly Disk Encryption Software for Windows XP/2000 and Linux