Although Windows 7 comes packed with the strong BitLocker disk encryption feature which can be used to encrypt an entire disk drive, but this feature is not available in all the editions of Windows 7. If you are using Windows 7 Home edition but still want some way of encrypting your disk drive, then you can try free and open source solution called DiskCryptor.
DiskCryptor is a free Windows application that allows you to encrypt all the partitions including the system partition (on which the Windows operating system is installed). You can use the AES, Twofish and Serpent encryption ciphers and their combinations for encrypting the partitions. It features on-the-fly transparent disk encryption for all the partitions. It supports encryption of system or bootable partitions as it offers pre-boot authentication, along with compatibility with non-Windows boot loaders like GRUB or LILO.
You can download DiskCryptor from its website which is in Russian, Polish and English. The download is available both as a setup installer and as a standalone program. It has support for Windows XP, Vista, 7 and 2008 – both 32-bit and 64-bit editions. I chose to download the ZIP archive of the stable version. When you run it for the first time, it asks to install the DiskCryptor driver. After this you need to restart your computer as the driver loads only at the boot.
Using DiskCryptor is very easy, just select a partition from the list and click on the Encrypt button. It would ask you select the cipher to be used and a wipe method (in case you want to wipe the hard disk contents). You can choose the cipher from AES, Twofish and Serpent and their combinations. Next you have to supply the password and click on the OK button. This would start the encryption process.
When you insert an encrypted disk to your system, Windows will not recognize it and ask to format it. To access this encrypted disk you need to mount it in the DiskCryptor by supplying your password. Only now you would be able to access this disk in Windows Explorer as usual. If you decide at a later stage not to keep a disk encrypted, then you can mount it and click on the Decrypt button. This would start decrypting your disk and return it back to normal state.
If you do not need DiskCryptor then you can uninstall it. If you are using the setup installer version, then uninstalling it is very easy. But if you are using the standalone version, then you need to remove the driver first. You can uninstall the driver by selecting File → Uninstall Driver in the DiskCryptor application. Then delete all the files related to the DiskCryptor.
You can download the DiskCryptor tool from http://diskcryptor.net/.