There is nothing better than encrypting the system partition and all other partitions if you want to protect your files from unauthorized access. There are still ways around this but they require specialized equipment and access to the PC.
The main reason why this is the best option in regards to security and privacy is that it protects all files on all drives when the computer is not turned on.
Regular users on the other hand may be better off encrypting only their important documents and files, and other areas of the operating system that may reveal information about those files.
One of those is the Windows Pagefile, which is basically a hard drive cache for files. The file is used by Windows even if your computer has enough memory available. It is possible to delete the Pagefile on exit, but that does not guarantee that the information it contains cannot be recovered.
Data that is deleted is not really removed from the hard drive it is stored on. The only thing that is happening is that references to the file are removed and that its storage space is available again for writes. This means that it takes time before the data is completely gone and not recoverable anymore.
The only possible solution next to encrypting the system partition? Encrypting the page file. This can be done with the Windows program fsutil that is installed with the operating system.
Please note that the pagefile can only be encrypted if the containing hard drive uses the NTFS file system. The majority of Windows Vista and Windows 7 PCs should use NTFS file systems.
Update: This works in newer versions of Windows as well.
You need to open an elevated command prompt by clicking on the start orb, then All Programs > Accessories. Locate Command Prompt in the listing, right-click the program and select Run as administrator from the context menu. This is the way in Windows 7, it may be slightly different if you use a different version of Windows.
Update: The general way is to press the Windows-key, type cmd.exe, right-click the result and select run as administrator from the context menu.
Issue the following command to encrypt the pagefile in Windows:
fsutil behavior set EncryptPagingFile 1
You need to restart the PC before the change takes effect.
You can also check if the pagefile is encrypted. For that issue the following command.
fsutil behavior query EncryptPagingFile
A return value of 1 indicates that the pagefile is encrypted, 0 would indicate that it is not encrypted.
You can also remove the encryption of a pagefile again. This is done with the command
fsutil behavior set EncryptPagingFile 0
The pagefile is encrypted with the Encrypting File System (EFS) which provides the file encryption technology on NTFS volumes.
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