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Is it safe to encrypt my Windows 7 %userprofile% folder using EFS ? i.e. are applications or system logon going to be affected?

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If you'll encrypt your whole profile you'd also encrypt the key to decrypt it...

So, no you can't encrypt your profile - you must choose specific folders.

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If you are logged into your account in a Windows 7 machine, you can encrypt just about all your files by encrypting your user account directory while you are logged into it. While windows' is encrypting the files it won't be able to encrypt files in use, including the key itself. Ignoring all files in use will provide almost all files in your user directory to be encrypted. I've done it and so far have not had any problems. And as always, be sure to backup your encryption key and password protect the backup.

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According to this article, files marked as System will not be encrypted, including the keys.

However when I tried to encrypt my user profile folder, it broke the profile. Explorer hung at various stages after login and I could not repair it even after decrypting all the files and had to create a new account.

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