Encrypting files, directories and hard drives.

First of all, you should ask yourself, what should I use encryption on?
Well, that should be easy to determine. All you computerized work equipment for starters.
PDA (Personal Data Assistant) Palm, Pocket PC, Treo, your smartphone, laptop and workstation. Even your USB memory, flash cards and other portable storage devices you use. Imagine losing your laptop and PDA at the airport. The agony of not knowing what vital information you just left exposed to anyone that gets hold of your devices. Encrypt your data, and you will at least eliminate everyone from accessing your files and data. Encryption does not represent 100% security for your files and information, but it will make many times harder, even for professional IT security experts to force. And amateurs, will most likely not care to try, it just to hard.

One free product that I like, is TrueCrypt.

TrueCrypt
has been around for some years, and it is free as in opensource on-the-fly encryption.
Provides two levels of plausible deniability, in case an adversary forces you to reveal the password:
1) Hidden volume (steganography – more information may be found here).

2) No TrueCrypt volume can be identified (volumes cannot be distinguished from random data).

Encryption algorithms: AES-256, Blowfish (448-bit key), CAST5, Serpent, Triple DES, and Twofish.
Mode of operation: LRW (CBC supported as legacy).