There used to be a great utility called TrueCrypt that could encrypt the disk drive and create encrypted virtual disks. However, development has stopped and the authors say it has bugs and security flaws. It isn't as secure as we thought it was and it is not recommended.
IDRIX has taken the TrueCrypt code, fixed the flaws and increased the security and released a new version of the program called VeraCrypt. If you are looking for an alternative to TrueCrypt, try VeraCrypt. It looks the same and it works in the same way, but it is much more secure. This makes it a bit slower, but it is worth it for the increased security.
Here is a step-by-step guide to creating an encrypted virtual disk that can be used to securely hide personal files on your computer so that no-one but you can access them.
Download VeraCrypt and run the program. The software can be installed into Windows or extracted to a folder. The second option is preferred because the less you install in Windows, the better it will be. It is slightly less convenient, but instead of going to the Start menu or Start screen, you just open the VeraCrypt folder and double click VeraCrypt to run it.
Go to the Tools menu and select the Volume Creation Wizard. A new window opens and there are three options. Select the first one – Create an encrypted file container.
This creates an encrypted file on the disk that will become a virtual disk drive. Click Next and there is a choice of a standard VeraCrypt volume and a hidden one. The standard one is usually fine, but the hidden one creates a VeraCrypt volume within a VeraCrypt volume.
If someone twisted your arm and made you reveal the password to a VeraCrypt volume, they still would not see the hidden VeraCrypt volume inside it because it is hidden. There isn’t usually any need to go that far, but the option is there if you need it.
You then have to select a file and folder for the VeraCrypt volume (the encrypted disk). Choose the Public folder, your Documents folder or somewhere similar where you can read and write files.
Several different encryption methods are available and AES is selected by default. This is fine and there is no need to change it. Click Next.
Enter the size of the volume (disk) to create. Select GB and enter 1, 2, 3 or select MB and enter however many megabytes you want it to be. You cannot change this afterwards, so make it as big as you will need. (More than one volume can be created if you ever need more secure storage space.)
Enter a password to unlock the volume. The longer it is, the more secure it will be. Avoid short passwords and don’t ever forget it or you will never be able to access the files you place in the volume.
The FAT file system is fine and it is what is used on USB disk drives, USB flash memory sticks and so on. Wave the mouse around to build a list of random numbers and then click Format. If it doesn’t start formatting straight away, wave the mouse around some more.
That’s it. The encrypted volume is created. Don’t click Next. That is for creating another volume. Instead, click Exit.
Back at the main program window, select a drive letter to use with the VeraCrypt volume. It should be one that is not already used for something. Here K: is selected. Click the Select File button and select the file you just created in the Volume Creation Wizard.
When you want to use this encrypted file as a disk drive, click Mount and enter the password you set in the Volume Creation Wizard. After a few seconds, the volume is mounted and this makes it look exactly like a disk drive in Explorer windows.
You can use this virtual disk just like a normal real disk drive. Copy files to it using Explorer, save files to it in applications, edit photos on it, and so on.
When you have finished, click the Dismount button in the VeraCrypt window and it is removed from Explorer. The contents are encrypted and no-one can access it without the password.