Linux – Encrypt entire Linux drive with TrueCrypt

Partition pros:

1. It's harder to accidentally delete a partition. :)
2. Necessary when encrypting the entire operating system.

File pros:

1. Files are easier for many people to understand.
2. Files are easier to move/copy.
3. You can use the rest of the partition for other files (like the traveler mode files)

The section on Sharing over a Network from the TrueCrypt user's guide makes it look like you have a couple of solutions-- mounting the shared file hosting the volume locally on computers or mounting the file hosting the volume on the server computer. The big difference between the two is that the volume's contents will be accessible read-write to all client computers when it's mounted on the server computer and shared (albeit access to the data will cross the wire "in the clear") versus the volume being mounted read-only on all computers when mounted locally on each machine.

If your users need seamless read/write access to the encrypted files either a TrueCrypt server-side mount or EFS is probably a better choice. The data is still going to cross the wire in the clear with EFS, as with TrueCrypt and the server-side mount.

Some people get really down on EFS but I think it fills a niche and solves a problem. It's well designed for what it is, but the problem that it seeks to solve is fundamentally awkward to solve.

Configuring EFS in an AD envrionment really isn't too difficult to setup. The most difficult part is wrapping your mind around the recovery agent functionality and exporting the recovery key to a safe offline location. You will need a PKI, but Microsoft's Certificate Services can automate most of the process for issuing certificates to users (have a look here for information about autoenrollment in Windows XP: http://technet.microsoft.com/en-us/library/bb456981.aspx)

Have some a look at the docs from Microsoft: http://technet.microsoft.com/en-us/library/cc962122.aspx (and another at http://technet.microsoft.com/en-us/library/bb457116.aspx)

Multi-user access to EFS files is a bit of a "wart" on the part of Microsoft, but it's not too hard to deal with. There's a very good answer here re: multi-user access to EFS-encrypted files.