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Create an encrypted disk image that grows as required
Authored by: nenewsjunkie on Jun 30, '09 08:48:09AM
10.5 has this option directly in disk utility itself. I have a video tutorial available on my blog. Check it out:
-Ken

[link:]http://www.tz42.com/blog/2009/06/30/mac-encryption-using-disk-utility/

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