Well, a quick test confirms that Truecrypt does work in "file" mode. Using Windows XP and the Pogoplug P:\ drive mapper thingy, I successfully created a 10MB Truecrypt .tc file on the pogoplug, mounted it as R:\ and copied files to and from it with no troubles. It looks like it may cache writes, seems that it wrote most of my data when I went to unmount the Truecrypt volume. Also, my Pogoplug is remote (not at my location).

I don't think Truecrypt's "partition" or "full drive" encryption techniques will work with the Pogoplug because of how your drive is not directly presented as P:\ (that shared folder thing might break stuff), and I'm not sure a drive with partitions plugged into the Pogoplug shows up properly. ALthough, of course, I haven't tested any of this. I'll leave that up to you all to have fun with, heh!