Start by either clicking the TrueCrypt icon in the notification area of your task bar or by going to
Start > All Programs > TrueCrypt > TrueCrypt

Click on the Create Volume button to begin creating the new volume. The wizard is rather intuitive in creating volumes. TrueCrypt 5 and up has one extra wizard screen before this one, in which you can select what kind of volume you wish to create. For our tutorial just select the default, “Create a file container”. Then you will see the screen below. For our example we will create a standard TrueCrypt volume. Hyper-paranoiacs can create a hidden one, if they like.

Click Next to continue and then hit Select File to point to the place where you want to create your TrueCrypt volume to. The idea is to not put it in a place people will normally look for. You might put it in another subfolder on another drive which has a name that has nothing to do with encryption, such as E:\eternity\somefile.tc

Note that using the .tc ending will alert anyone who knows anything about TrueCrypt that this is an encrypted volume. You can give it any ending you choose, including such standard endings as .jpg or some such thing. But this will be a big file (on the order of over 1 GB), so don’t give it an ending that will raise any flags. For example, a monster JPEG (.jpg) file is bound to raise questions and a computer-savvy person may even suspect that it is a virus and delete it. I, at least, have never come across a JPEG any bigger than 20 MB. Good generic endings would be .iso or .dat or .001 or no ending at all!
Click Next and then select the kind of encryption algorithm you want to use. If you use a single algorithm, it’ll be far easier to crack than a double or triple encrypted algorithm. But a single algorithm will decrypt faster for connection to Outlook. It’s your choice.

For our example I am going to use an Serpent-Twofish-AES algorithm. I have a fast enough computer to handle the calculations. If you have an older machine (or are running Vista), you may want to use a less complex algorithm.
I’m also going to use the default Hash Algorithm, RIPEMD-160. You can pick whichever one you want, but the default should work fine as well. Feel free to research which hash algorithm will work best.
Click Next and type in the size of your encrypted hard drive. Make it large enough so your Outlook.pst file can grow for a long time. I’m going to make the size 1.5 GB for this example. To calculate 1.5 GB in to MegaBytes, multiply it by 1024. That will give you a size of 1536 MB.

Click Next and type in your passphrase. Make it really, really long. For this example, I’m going to use the following:
I_Don’t_L1ke_Micr0$0ft_Much
This passphrase has 27 letters, digits and special characters. Make up your own passphrase. Use password common sense and remember that spaces are allowed, too.

Click Next and select the way you want your partition to be formatted. If you want to have maximum portability, FAT32 is good, but if you’re only planning on using this on your Windows machine use NTFS, as I am in this example. It also formats faster. Now click Format, sit back and twiddle your thumbs for a while or go get a cup of tea or something while TrueCrypt creates your encrypted volume.

When the volume has been created click OK to get rid of the confirmation box and then hit Exit to close the wizard. Your volume has been created. And now we can move on to the next step.