Free on the fly disk/file encryption software is a very good way to protect a set of data on your computer. Don't rely on the simple password protection mechanisms of popular Office packages, or compression utilities, they can be broken or by-passed easily. OTFE software works by encrypting a whole partition and restricting access to it by means of a password or another secure way or creating a file, which can be mounted as a fake (virtual) disk. The virtual disk will appear in your "My Computer" as a regular removable drive in which you can manipulate your files. To mount the file will require a password and you can un-mount it at any time. Usually if you've forgotten to un-mount it before you shut down your computer, the software will automatically do it for you and the virtual disk or encrypted partition will not be accessible during the next session. I use it personally and find it a great way to store data securely. If you have Windows 98, I would recommend you using E4M (no longer supported, but amazingly well programmed) and if you are using Windows 2000 and up, go for FreeOTFE or TrueCrypt (the successor to E4M, which unfortunately does not work on Windows 98).
CompuSec - Free On The Fly Disk/File Encryption Software
This software can be used to protect all your computer data at onnce. It uses an AES encryption algorithm, which they claim is fast to encrypt your whole hard disk. All data, with no exception, is secured. It can also encrypt removable drives.
Cryptainer LE - Free On The Fly Disk/File Encryption Software
This software works on all relatively modern Windows Operating Systems like Windows 95 (OSR 2), 98, ME, 2000, XP, 2003 and Vista. It can create Blowfish-encrypted file containers with a maximum capacity of 25MB.
CryptoExpert Lite - Free On The Fly Disk/File Encryption Software
CyrptoExpert Lite allows you to create CAST-encrypted virtual disks from files and mount them for you to use.
Dekart Private Disk Light - Free On The Fly Disk/File Encryption Software
This software, just like the reguar OTFE software, create a virtual disk to appear in your 'My computer', and you can only access it using your defined password. Works on Windows 2000, XP, 2003, Vista.
E4M - Free On The Fly Disk/File Encryption Software
If you are worried that someone might have access to your documents, emails, sales projections, contracts, tax returns or receipts, romantic letters, or any other private files, then this product is for you. E4M is an on-the-fly disk encryption product. What this means is create a volume on your hard disk, CDROM, floppy or other media which is essentially just a normal file. Supported algorithms are triple-DES, IDEA(2), DES, Blowfish, CAST and MDC/SHA(1). Unfortunately this software is no longer being developed, but it scuessor, TrueCrypt, is very active. Recommended for Windows 95, 98 users!
FreeOTFE - Free On The Fly Disk/File Encryption Software
One of the really cool OTFE software for Windows 2000, XP, 2003 and Vista. It works smoothly and allows you to create encrypted partitions or files on Windows. You can then mount them on your computer. It supports hidden volumes and many other things. Among the encryption ciphers are: AES and Twofish, Blowfish and more. The hash algorithms are MD2, MD4, MD5, RIPEMD-128, RIPEMD-160, SHA-1, SHA-224, SHA-256, SHA-384, SHA-512. However, many other ciphers hash algorithms can be added as plugins. And did I mention FreeOTFE was open source? Recommended!
Scramdisk 4 Linux - Free On The Fly Disk/File Encryption Software
This software is a a set of drivers which will allow you to mount Scramdisk (Description) and TrueCrypt (Description) containers on Linux. Both of the latter software work on Windows but with help from Scramdisk 4 Linux, we can now use them for Linux. Scramdisk 4 Linux and TrueCryptDescription) both are free OTFE software and are availble for download on this same page.
TrueCrypt - Free On The Fly Disk/File Encryption Software
TrueCrypt is the descendant of E4M. It supports the creation of encrypted partitions and e
ncrypted file containers. It is one of the best for Windows 2000 and up. It supports many encryption algorithms like: AES, Blowfish, CAST, IDEA and Triple-DES. This is an open source software.
Scramdisk Encryption - Free On The Fly Disk/File Encryption Software
Again, this software allows you to an encrypted file container on you computer. you can choose from Triple DES (EDE), Blowfish, DES, IDEA, MISTY1, Square, and TEA. However this software is no longer supported.