As there are several nice tools here on the site that work with VHD files, I did a little research on VHD encryption, which might be a little more effective depending on your setup. The catch is it requires a Professional or Enterprise edition of Windows 8, or Ultimate for Windows 7 (I have no idea about Windows 10), meaning it's less portable than other options.
A lot simpler than almost every other encryption option out there (apart from the fact that it's limited to specific Windows versions).
Dynamic size (expands depending on content), meaning it might be more space efficient for some users. TrueCrypt has one but I've had mixed experiences with it and even the program recommends against it's use for speed reasons.
Cons
It's not cross-platform.
I don't trust BitLocker (wikipedia link) as much as I trust TrueCrypt but for probably 97% of users, it's more than adequate.
Note that there is an encrypted VirtualBox disk format out there that I haven't tested yet, but has some promise. VMware likely isn't an option since their format has consistently foiled my efforts to just open and look at the ----ing files.
webfork wrote:putting it inside TrueCrypt breaks both of those.
I meant precisely the other way around: you mount a VHD that is then fully encrypted with TrueCrypt's full disk encryption -- haven't tested it, so YMMV...
Have you tried the using