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I want to know if doing so would prevent windows from logging in to the user or not, has anyone tried to encrypt the user profile folder or the windows folder?

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No, it would not prevent the user from logging in, as the authentication process happens outside the user's profile folder.

I would encourage you to not use EFS, however, as it is very dangerous. First of all, EFS requires a Data Recovery Agent to recover your data should anything happen to it. Enabling EFS is trivial (all you do is check a box), but creating a data recovery agent is not. You have to do extra work to protect yourself and EFS gives no warnings at all about this. This makes it VERY easy to lose all your data.

Second, EFS is integrated into the filesystem and does not rely on a container format the way other encryption systems do (even Microsoft's own BitLocker uses a container). If your hard drive dies, for example, you cannot simply drop the drive into another computer and copy your data somewhere. You need a working Windows computer and the data recovery agent that EFS didn't tell you to make. That also implies that the dead drive is still stable enough to be mounted and used by Windows, which it likely won't be if you're resorting to this method to rescue your data.

Finally, if you ever want to change your password, you must be logged in with that account and change it from there. ANY OTHER METHOD will cause you to lose access to your EFS encrypted data (like if you forget and use the Administrator account to reset it for example).

EFS is so easy to use and so convenient to work with that it hides the risk to which you are putting your data. If anything ever happens to your computer (e.g. you have to reinstall Windows, your hard drive dies, or your profile gets messed up), you'll really be hating yourself for using it.

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    I ended up creating a .vhd and using bitlocker on it. It automounts when I login, using daemon tools.
    – Rami
    Feb 7, 2016 at 16:13

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