Drive encryption utilities are important when you want to encrypt many files, not just one or two.
The top product in this category is TrueCrypt, an open-source utility which enables you to create encrypted "virtual" drives of almost unlimited size, and in which you can securely store files and keep them away from prying eyes.
TrueCrypt offers a wide range of encryption algorithms, including the option to encrypt with multiple algorithms, as well as "plausible deniability" for the benefit of the truly paranoid. The program is very stable (although backups are obviously recommended).
Newbies might find the program a bit daunting at first; however, more experienced users who want serious virtual drive encryption would be hard-put to find a better program.
TrueCrypt is great for protecting your data on USB flash drives too, though make sure you copy truecrypt.exe and truecrypt.sys onto the drive as unencrypted files. Note that you will need admin privileges on the host computer.
TrueCrypt: http://www.truecrypt.org/
"BestCrypt Traveller"..which is a small freeware version of it's big brother. It comes in a single small .exe file, that will allow you to store it on a USB or your PC/LapTop and, once there, it can be used to set up and use a virtual drive, complete with drive letter, which is password protected and holds any number of files, folders..or both, as long as their total combined size is not greater than the size of the drive you originally created.
The program, when in use, sits in your system tray in the form of a little icon that, when clicked on, offers a pop-up menu from which you creat/mount/dismount the drive in question. When not in use, the drive and the files/folders it containes, like all virtual drives, still resides on your system or USB, but is invisible to both you and other parties until it is mounted..at which time it appears in the lists of drives on your system.
Overall..for design, ease of use and usefulness.
BestCrypt Traveller: http://www.jetico.com/bctraveller.htm
Other staff:
BCWipe: http://www.jetico.com/bcwipe.htm
BestCrypt: http://www.jetico.com/bcrypt.htm
BCArchive: http://www.jetico.com/bcarchive.htm
Jetico Personal Firewall: http://www.jetico.com/jpf.htm
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