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Basically what I want is software that allows me to

enter password number one > decrypt > logs me in

enter password number two > decrypt > deletes some data that I have pre specified > logs me in

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I don't know of any such software that can do exactly what you want to. However, TrueCrypt allows you to create a so called hidden volume;

It may happen that you are forced by somebody to reveal the password to an encrypted volume. There are many situations where you cannot refuse to reveal the password (for example, due to extortion). Using a so-called hidden volume allows you to solve such situations without revealing the password to your volume.

The principle is that a TrueCrypt volume is created within another TrueCrypt volume (within the free space on the volume). Even when the outer volume is mounted, it should be impossible to prove whether there is a hidden volume within it or not*, because free space on any TrueCrypt volume is always filled with random data when the volume is created** and no part of the (dismounted) hidden volume can be distinguished from random data. Note that TrueCrypt does not modify the file system (information about free space, etc.) within the outer volume in any way.

Basically, you are required to set 2 passwords where only one will unlock and decrypt the entire volume while the other only decrypts a part. The (still) encrypted part will be hidden and it's not possible to detect it as a hidden partition since the volume space is filled with seemingly arbitrary data.

A little illustration (retrieved from the same TrueCrypt page as mentioned above):

enter image description here

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Yes I'd known of this, however there is always this =). – John Mar 7 '12 at 15:57
@johnthexiii what exactly is the point you're trying to make? Hidden encryption is nearly always more secure than deleting the files since deleted files are (usually) pretty easily recovered by experts... – BloodPhilia Mar 7 '12 at 15:59
The point is once I've given password number two I never want to be able to get to the files again no matter how much physical abuse is given, even after 7 passes I'll take my chances with the experts. – John Mar 7 '12 at 16:06
@johnthexiii Then no, I don't think such software exists... Again, would like to make clear that erasing the files would NOT guarantee that recovery is impossible. – BloodPhilia Mar 7 '12 at 16:07
@Johnthexiii - You don't seem to accept the advice being given. – Ramhound Mar 7 '12 at 17:08

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