FreeOTFE is an open source program to create and mount virtual encrypted disks in Windows Vista/XP/2000 and Linux. It provides two levels of plausible deniability (hidden containers and no signatures to make differentiate containers from random data), on the fly encryption and supports numerous encryption algorithms (including AES, Blowfish, Serpent and Twofish.
A hidden volume is a volume concealed within the free space of another FreeOTFE volume. Even when the outer volume is mounted, it is hard to prove whether there is a hidden volume or not.
When a hidden volume is mounted, the operating system and third-party applications may write to non-hidden volumes information about the data stored in the hidden volume (e.g. most recently used mru).