For one of my projects @ college, I wanted to create a WinMo application to secure data. I have previously used FreeOTFE and I wanted to implement similar functionality to my application. My choice of encryption algorithm was AES-128 with XTS mode of operation. I also wanted to create a stream interface driver for my application as well so (just like FreeOTFE or TrueCrypt) i can create and emulate a virtual disk drive for the user to interact with just like a removable SD card.
However the problem @ hand (creating a stream interface driver) required far more time than i estimated (i knw i screwed up! )
So my plan B is to use a compression library to compress all the files in to a single archive. My question is, whether XTS mode of operation is still a viable option for compressing single files and storing? So i would be first encrypting the file with AES-XTS and then adding it to the archive. To my understanding XTS has got to do something with block sectors of the hard disk. So does using compressed archives prevent me from using XTS as the mode of operation?