However, you aren't finished.
Step two: Create a hidden volume
FDE drives still leave your data and personal information vulnerable in at least two scenarios: 1) You are forced to turn over your password (as in Judge Blackburn's District Court ruling), or 2) Someone has hacked into your live machine and remotely recording your keystrokes/data while you work.
To address these issues, we are also going to put our personal/business files in an encrypted directory -- but not using just any encryption scheme. Encryption with hidden volumes is the key to really protecting your information and rights.
Here's a useful analogy for understanding hidden volumes:
Imagine a magic door. If you unlock the door with one key, it opens to a closet full of junk and old boxes. However, if you use a different key, and the door opens to the inside of a bank vault. If you look at the walls surrounding what's behind the door, they look the same size regardless of whether you are opening the closet or the vault . Anyone opening the tiny closet or looking at the structure of the door won't be able to see the giant bank hidden within.
With a correctly implemented hidden volume on your encrypted hard drive, you don't have to worry when someone cracks (or coerces you into giving up) the password. When they use it to open the door, they will only see the closet.
I prefer to use the word "password" for the closet. It's easy to remember and sadly common, and any password-cracking tool will guess it in milliseconds with a simple dictionary attack. Once the closet is open, non-sensitive business files and perhaps a few love letters or copied movies -- something that might cause minimum embarrassment -- will be revealed. Even to a skilled thief with good forensic tools, the real data, the bank vault, cannot be seen. They have no indication or proof it even exists. For all that person knows, they got your password and opened your encrypted files. In a courtroom setting this is known as "plausible deniability". (Yes, you complied with the court order to give up your password.)
To get started, once again we turn to TrueCrypt to set up a hidden volume file. Open TrueCrypt, select create a volume, create encrypted file container, normal hidden volume. Make sure you create a very large outer layer as this will eventually contain both your closet and bank vault. For a normal "My Documents" folder, I create a 20GB file. Don't forget an easy password for the outer layer -- this easy password will be the one that opens the closet.
After it formats, create the hidden volume inside this wrapper with 19 GB and a strong password, leaving 1 GB for your closet. After this hidden volume formats, open the outer layer by mounting and using the simple password. Import some non-sensitive files, photos and random documents. Test your work when you reboot: Use the easy password, and you should see only these non-sensitive files.
Going forward put all your important files in the hidden volume. Unless you leave your FDE and new encrypted My Documents folder open 24/7, your data will remain protected.