Here are some quick notes on how to create a simple encrypted filesystem on Linux. This example was done on a Zenwalk 4.8-beta system running the Linux 2.6.22.5 kernel, but the steps should be applicable on any Linux system (no Zenwalk-ism's were used).

First, you need to insert the cryptoloop kernel module:

modprobe cryptoloop

Then, create the file that will be used for the encrypted filesystem using the dd(1) command. The following command creates a 500MB file with random bits from the /dev/urandom device.

dd if=/dev/urandom of=/home/username/.crypto bs=1024k count=500

Use the losetup(8) command to associate a loopback device with that file.

losetup -e aes /dev/loop0 /home/username/.crypto

Now we create an ext2 filesystem on that device:

mke2fs /dev/loop0

You can now create a mountpoint and mount your encrypted filesystem:

mkdir /home/username/mntcrypt
mount -t ext2 /dev/loop0 /home/username/mntcrypt

When you're done using the encrypted filesystem, you can unmount it and deassociate the loop device.

umount /home/username/mntcrypt
losetup -d /dev/loop0

For convenience, you can prepare an entry in your /etc/fstab file for future use:

/home/username/.crypto /home/username/mntcrypt ext2 defaults,noauto,loop,encryption=aes 0 0

Once the first-time setup steps are done, you can mount your encrypted filesystem with the following steps in the future:

modprobe cryptoloop
mount /home/username/mntcrypt