If you are using Windows 7 then you should also read my post on how to Lock drives and encrypt files and folders.
Now I will show you all the magnificent features that Axcrypt provides you for the encryption of your files and folders
§ Click here to download Axcrypt (only 1.4 mb)
§ Now install the software and follow the instructions.
§ Put the data that you want to encrypt into a folder and right click on it.
§ Now click on Axcrypt-> Encrypt
§ Click ok and now it will ask for you to enter passphrase.Enter and confirm your passphrase.
§ Now click ok and within minutes it will encrypt your data.
§ Now open your folder and and you will notice that the icons of your files have been changed.
§ Now it will ask for a password every time somebody tries to open it
§ While the above encryption features are provided by other softwares also the special feature of Acrypt is that if you create a key file and store it into a usb drive then it will only open the encrypted files if and only if a correct path to the key file is provided otherwise it will not open the encryption even if the correct password is provided.
So the files can now only be opened by the combination of correct password and correct path to the key file.
Note:- If you create a key file please do save another copy at some safer place because if you you loose it then your encrypted data cannot be opened by any means
Another feature of Axcrypt is that it provides a file shredder using which you can permanently and securely delete your files and folders which cannot be recovered by using any data recovery software.To use it right click on the file or folder and then Axcrypt->Shred and Delete