I've been experimenting with TrueCrypt, an open source on-the fly disk encryption tool. With TrueCrypt you can create encrypted disk volumes on Windows or Linux using a variety of encryption algorithms.
TrueCrypt also supports a traveler mode on Windows, where the application executable and linked libraries are copied to a removable drive. This is perfect for taking encrypted volumes with you on a portable USB flash drive or disk.
I've attached a flash video of the setup and use of TrueCrypt in traveler mode.
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