Here is a step-by-step tutorial that shows you how to setup TrueCrypt 7.1a File & Folder (or Whole-Disk) encryption on your platform. For the purposes of this tutorial, I will be showing you how this is done in Linux. The process is almost identical in MS Windows XP/Vista/7 or MacOSX.
First, after you have downloaded the corresponding file for your platform from the TrueCrypt Downloads page, you’ll install it on your desktop and create a shortcut or let the application installer create a shortcut to your desktop for ease of access.
When you double-click on the icon, this is the first screen that you will see. In this screenshot, you’ll see numbered volume labels rather than logical drive letters. If you’re installing in MS Windows, you’ll see logical drive letters instead. Next, click on the Select File button and the TrueCrypt Volume Creation Wizard will open to guide you through the rest of the process.
If you’re a beginner of first-time user, select the first option, which is to create an encrypted file container that will serve as the encrypted volume on your system once it is mounted. Click the Next button.
In this step, you’ll configure whether you want to install the Volume only in Linux (or whatever platform you are installing TrueCrypt on) or whether you will be moving the volume to another platform. Here, I chose the Linux platform only.
In this step, you will select the type of Volume that you wish to create. I would recommend you select the first option, which is the Standard TrueCrypt Volume.
Click the Next button and you’ll be asked for the location of the file you wish to use as the encrypted volume. Click the Select File button and navigate to the folder or file that you want to use. Be careful in this step because if you select a file that already exists on your system, it will be replaced later on in the process and the data in that file will be erased. If you select a folder, TrueCrypt will create a file for you in that folder.
Once you have selected the file, Click Open and this will be loaded into the Volume Location window.
Now, you will Click Next and you’ll be asked to designate the size of the Volume that you wish to allocate on your system.
Enter the size in KB, MB, or GB up to the limit of the available space. I would recommend no more than 3 or 4GB to start. You can select the size to expand or shrink depending on the amount of data in the file that is encrypted but for now select a fixed size. I chose 4GB as my volume size. Click Next, and you will be asked the file format that you would like to use in formatting your volume. I chose ext4 for Linux. You could choose NTFS of FAT for Windows or HFS for MacOSX.
Click Next and you will be asked to authenticate as administrator before the volume will be formatted.
Click Next, and you will be asked to select an encryption type to encrypt the Volume. Choose a very strong encryption type. I chose 256-bit AES and the default hash algorithm.
Next, you will be asked to choose a password for your encrypted volume. I selected a randomly-generated password using my KeePassX Password Manager application, which was 30 characters in length,
After setting the password, Click Next, and the volume will be created.
After the Volume has been created, then it will be time to mount your encrypted volume on the system. In this step, you will reopen the TrueCrypt application after closing it in the last step, and you will select the file that was chosen earlier by clicking the Select File button and navigating to the file and selecting Open. Then, click on the Mount button.
You will be prompted to enter the password that you configured for TrueCrypt, then you will be asked to authenticate as administrator over the system before you can mount the volume. Once mounted, you will be able to drag and drop files into the volume or copy and paste files in that volume. Any files that you place in the volume, once mounted, will automatically be encrypted on the fly.
This completes the basic tutorial on creating and configuring your first mounted volume on the system.