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I'd like to encrypt my system disk and use a keyfile stored on a USB flash. I was planning to use truecrypt, but it doesn't support keyfiles for system drive encryption.

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If you can set up your USB flash drive as an Emergency Boot Disk (like a Rescue Disk), then alter the TrueCrypt boot process so that it fails even with the right password, this might be useful to creating the same effect (except that you'd be booting from your USB flash drive and still entering a password). I haven't tried this, but as long as you can boot from USB then it should be possible to make it work this way. –  Randolf Richardson Aug 11 '11 at 8:35
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Our company laptops are encrypted with Truecrypt and you have to use a USB key called a Yubikey to 'unlock' them.

enter image description here

The keys 'type in' a 32-character string/passcode when the sensor is pressed. Very simple to setup.

http://yubico.com/yubikey

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I was looking use USB flash drives I already have –  teeth Aug 11 '11 at 9:27
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