So what you're saying though is to encrypt the entire linux HD with trucrypt? right? not just create a truecrypt image on the VM's HD.
I am saying about a following scheme:
1. Create encrypted TrueCrypt hard drive.
2. Put a VirtualBox disk with VirtualBox Linux machine on it.
3. Install TrueCrypt within the Virtual Machine
4. Create encrypted TrueCrypt hard drive within the VM.
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5. Create a VirtualBox disk with VirtualBox Linux machine on the VM.
6. Install TrueCrypt within the Virtual Machine in Virtual Machine
7. Create encrypted TrueCrypt hard drive within the VM in VM.
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(...)
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(...)
And so on...
This is the dumbest bullshit ever.
Everybody please ignore this "advice." Also, VMs cannot protect data.