google truecrypt. you can encrypt an entire drive, or create an encrypted file that can be used to store files and folders. i ran with an entire drive encrypted for quite some time before i decided that it just wasnt worth it. when you first boot the encrypted drive will not be seen in windows explorer, but when you launch the application you can tell it to "mount" the volume and then everything you drop in there will be encrypted transparently.
for added security you can also create an encrypted volume within the larger volume with two separate keys/passwords. this way if you ever run into it and someone sees you have an encrypted volume (which they can tell a volume is encrypted btw) you can give them the first key to the main volume and have some junk files there so they can see you do keep stuff there. then you put all your really important stuff (like your pictures) in the sub-volume. as said earlier, its easy enough to see that a volume is encrypted, but due to the nature..its really not possible for them to tell that there is an encrypted volume inside the encrypted volume.
its a neat application and fun to play with, and it didnt cause any performance hit, but i just felt for me personally it wasnt needed.