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What I would like to do is modify all the files in a directory so they use a standard encryption, requiring a password and a 2nd layer of my own encryption. I would like have my application look at the directory and make a virtual, decrypted directory to open these files as normal. They requires non linear reads (i.e. audio file that I may record). Would file pipes be a solution?

How can I do this? I understand the encryption part, but not the virtual files. I am aware of Truecrypt, but I'll be putting some of these on DVDs and I am worried that if I tried copying the 4.3gb Truecrypt file a checksum error will occur if a block becomes corrupted. This would prevent me from copying it.

+1  A: 

I'd still recommend TrueCrypt for this. Don't worry about corruption, TrueCrypt claims to handle this perfectly well. From the FAQ:

What will happen when a part of a TrueCrypt volume becomes corrupted?

In encrypted data, one corrupted bit usually corrupts the whole ciphertext block in which it occurred. The ciphertext block size used by TrueCrypt is 16 bytes (i.e., 128 bits). The mode of operation used by TrueCrypt ensures that if data corruption occurs within a block, the remaining blocks are not affected. See also the question 'What do I do when the encrypted filesystem on my TrueCrypt volume is corrupted?

Nik
It sounds like i then would be able to open it from the disc but perhaps not copy the entire truecrypt file? that may be acceptable. I may just do this.
acidzombie24
Yes that should be entirely possible, you can mount volumes as read-only.
Nik