For what it's worth, I gave TrueCrypt a go awhile back and it works grate. There's a heck of a lot of reading that needs to be done to understand how that critter works but it's well worth it in the end.
I think that TrueCrypt has something like 3 levels of encryption that you can use to. I had to play with it for a week or so to figure out what I was doing.
One thing for sure though, you had better remember which virtual drive you stuck your files on and don't lose your password or you're doomed.
During my trial and error testing I did both.
I forgot which virtual drive I had used and forgot which PW I had used.
Luckily I was only using junk files anyway.
OK, that's my .02¢ worth.
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HP Pavilion 512n [Rescued from a pile of trash on the side of the road] 128 MB SDRAM, 60 GB Hard Drive, Windows XP, Home Edition, SP3, COMODO Anti Vitus and Firewall.