So I have a need for a encrypted disk - as a loop back file. I wrote earlier on how to restore a partimage backup to loopback, so lets see if we can make this work.
We need to tell the kernal how to encrypt disks with a module
modprobe cryptoloop
Create the loop file (like before, but with urandom to help hide the disk, the count is MB*1000 so in this case 1M)