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TrueCrypt 5 can now crypt partitions and require authentication at boot.  This is now much closer to your initial request

http://www.truecrypt.org/docs/?s=system-encryption

yes, something like that, but that would integrate into explorer.. or attach itself in some other way.

truecrypt.

Use "traveler mode"
autorun it
have it remember mount history
ONLY store data inside the TC volume

use volumes instead of partitions

 

Surely one of the metrics of XP performance monitor could be integrated into the explorer file copy/move progress window thusly:



in some kind of notation.  I'm not terribly thrilled by the ETA alone.

no need to reinvent the bridge