TrueCrypt is a software system for establishing and maintaining an on-the-fly-encrypted volume (data storage device). On-the-fly encryption means that data are automatically encrypted or decrypted right before they are loaded or saved, without any user intervention. No data stored on an encrypted volume can be read (decrypted) without using the correct password/keyfile(s) or correct encryption keys. Entire file system is encrypted (e.g.., file names, folder names, contents of every file, free space, meta data, etc).
Files can be copied to and from a mounted TrueCrypt volume just like they are copied to/from any normal disk (for example, by simple drag-and-drop operations). Files are automatically being decrypted on-the-fly (in memory/RAM) while they are being read or copied from an encrypted TrueCrypt volume. Similarly, files that are being written or copied to the TrueCrypt volume are automatically being encrypted on-the-fly (right before they are written to the disk) in RAM. Note that this does not mean that the whole file that is to be encrypted/decrypted must be stored in RAM before it can be encrypted/decrypted. The are no extra memory (RAM) requirements for TrueCrypt. For an illustration of how this is accomplished, see the following paragraph.
Let's suppose that there is an .avi video file stored on a TrueCrypt volume (therefore, the video file is entirely encrypted). The user provides the correct password (and/or keyfile) and mounts (opens) the TrueCrypt volume. When the user double clicks the icon of the video file, the operating system launches the application associated with the file type – typically a media player. The media player then begins loading a small initial portion of the video file from the TrueCrypt-encrypted volume to RAM (memory) in order to play it. While the portion is being loaded, TrueCrypt is automatically decrypting it (in RAM). The decrypted portion of the video (stored in RAM) is then played by the media player. While this portion is being played, the media player begins loading next small portion of the video file from the TrueCrypt-encrypted volume to RAM (memory) and the process repeats. This process is called on-the-fly encryption/decryption and it works for all file types, not only for video files.
Note that TrueCrypt never saves any decrypted data to a disk – it only stores them temporarily in RAM (memory). Even when the volume is mounted, data stored in the volume is still encrypted. When you restart Windows or turn off your computer, the volume will be dismounted and files stored in it will be inaccessible (and encrypted). Even when power supply is suddenly interrupted (without proper system shut down), files stored in the volume are inaccessible (and encrypted). To make them accessible again, you have to mount the volume (and provide the correct password and/or keyfile).
Download TrueCrypt from http://www.truecrypt.org/downloads.php.
After you’ve downloaded and installed the software, follow the instruction below:
Step 1:
Launch TrueCrypt by double-clicking the file TrueCrypt.exe or by clicking the TrueCrypt shortcut in your Windows Start menu.
Step 2:
Select a drive letter from the list (marked with a rectangle). This will be the drive letter to which the TrueCrypt container will be mounted.
Note: In this tutorial, we chose the drive letter M, but you may of course choose any unused drive letter.
Step 3:

Click Select File.
The standard file selector window should appear.
Step 4:
In the file selector, browse to the encrypted drive file and select it. In most cases your container file will be saved to your C: drive and will be labeled “FAST data”.
Click Open (in the file selector window).
The file selector window should disappear.
In the following steps, we will return to the main TrueCrypt window.
Step 5:
In the main TrueCrypt window, click Mount.
Password prompt dialog window should appear.
Step 6:

Type the password (which will be provided to you by your program manager) in the password input field (marked with a rectangle).
Step 7:

Click OK in the password prompt window.
TrueCrypt will now attempt to mount the volume. If the password is incorrect (for example, if you typed it incorrectly), TrueCrypt will notify you and you will need to repeat the previous step (type the password again and click OK). If the password is correct, the volume will be mounted.
Final Step:

We have just successfully mounted the container as a virtual disk M:
The virtual disk is entirely encrypted (including file names, allocation tables, free space, etc.) and behaves like a real disk. You can save (or copy, move, etc.) files to this virtual disk and they will be encrypted on-the-fly as they are being written.
If you open a file stored on a TrueCrypt volume, for example, in media player, the file will be automatically decrypted to RAM (memory) on-the-fly while it is being read.
Important: Note that when you open a file stored on a TrueCrypt volume (or when you write/copy a file to/from the TrueCrypt volume) you will not be asked to enter the password again. You need to enter the correct password only when mounting the volume.
You can open the mounted volume, for example, by double-clicking the item marked with a red rectangle in the screenshot above. You can also browse to the mounted volume the way you normally browse to any other types of volumes. For example, by opening the My Computer list and double clicking the corresponding drive letter (in this case it is the letter M).

You can copy files to and from the TrueCrypt volume just as you would copy them to any normal disk (for example, by simple drag-and-drop operations). Files that are being read or copied from the encrypted TrueCrypt volume are automatically decrypted on-the-fly (in memory/RAM). Similarly, files that are being written or copied to the encrypted TrueCrypt volume are automatically encrypted on-the-fly (right before they are written to the disk) in RAM.
Note that TrueCrypt never saves any decrypted data to a disk – it only stores them temporarily in RAM (memory). Even when the volume is mounted, data stored in the volume is still encrypted. When you restart Windows or turn off your computer, the volume will be dismounted and all files stored on it will be inaccessible (and encrypted). Even when power supply is suddenly interrupted (without proper system shut down), all files stored on the volume will be inaccessible (and encrypted). To make them accessible again, you have to mount the volume. To do so, repeat these steps.
If you want to close the volume and make files stored on it inaccessible, either restart your operating system or dismount the volume. To do so, follow these steps:

Select the volume from the list of mounted volumes in the main TrueCrypt window (marked with a red rectangle in the screenshot above) and then click Dismount (also marked with a red rectangle in the screenshot above). To make files stored on the volume accessible again, you will have to mount the volume. To do so, repeat Steps 13-18.