How can I move my /home folder in Ubuntu to another partition (also to be the "My Documents" folder for Windows, which I dual boot) and encrypt it.
Then I want the partition to be unencrypted by both Windows and Ubuntu when I sign in.
It will be tricky, but here are some pointers:
The problematic part would be windows and encryption. There are ext2 drivers for windows, but I don't know if they will work with vi$ta. Here are some related links: http://www.ext2fsd.com/
Same thing for encryption. You will need encryption which will work on both windows and GNU/Linux. I know that there are few programs which will do that, like TrueCrypt http://www.truecrypt.org/, but the problem is would windows allow you to use third party encryption on Documents dir? Also, do you want to have entire user directory on same partition as /home, or just Documents?
I know that it is possible to move My Documents, but I have never tried it myself. Here's a link explaining how to do it, hopefully, it'll be helpful http://www.mydigitallife.info/2007/11/25/change-my-documents-folder-default-location-path-in-xp-and-vista/
I myself am not satisfied with options I've offered you. Ext2 doesn't support journaling, and I'm unaware of drivers which fully support ext3. I have also heard that it's a bad idea to try to use ntfs-3g or fat32 for /home partition. I've also read that Ubuntu needs native Linux partition for /home, but I don't know how fresh that information is. Windows could also make problems with drivers if you try to place whole \users directory on a Linux partition, but I'm not 100% sure.
Make sure you have fresh back-ups of you data before you try anything. To me this looks like something that could easily cause data loss if the procedure fails.
I hope someone who actually did something like this could help.