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TrueCrypt creates an encrypted file that acts as a container for other files. When TrueCrypt is running and the file/container is opened with the password then Windows sees the container as just another disk drive - say X: and the files inside the container look and act just like regular files on the x: drive. The files on the x: drive are decrypted and encrypted on the fly.
When truecrypt is not running the container/file that truecrypt created looks just like a (large) normal file which contains random bits of data. The container file can be copied, backed up, etc just like a regular file.
For my travels later this week- I will have my UR files encrypted in a Truecrypt created file. After I logon to my notebook, I will run Truecrypt, enter my password to "mount the disk volume" and run UR. Other than the computing power to encrypt/decrypt the files on the fly, UR will have no idea that they are in an encrypted container.
Hope this overview helps...
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