TrueCrypt is a free open-source on-the-fly encryption software for Windows XP/2000/2003.  
 
It can encrypt partitions/devices or create virtual encrypted disks within files.  
The only free open-source on-the-fly encryption software that fully supports Windows XP.  
 
The only free open-source OTFE software for Windows XP that provides plausible deniability.  
 
Encryption algorithms: AES (256-bit key), Blowfish (448-bit key), CAST, IDEA, Triple DES.