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The system hdd is just one partition, windows 7 installed and the whole partition encrypted by TrueCrypt. Should I remove that before making new partition and installing Ubuntu on it (dual boot) infact will i even be able to make new partition?

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I would recommend you do so, so you have no problems at all during the installation. tell me what happends :) – samgabbay Nov 27 '13 at 16:03

The TrueCrypt documentation mentions that you can decrypt system partitions and system drives and to do this select System > Permanently Decrypt System Partition/Drive. After having the partition decrypted, resize the HDD manually (with partition manager of your choice) or just allow Ubuntu installation to handle it (install alongside Ubuntu). You may then re-encrypt the windows partition.

These links should help:

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When i re-encrypt the windows partition, will it ask for the pre-boot password only when windows is selected to be booted or even before the boot loader? – Gregory1 Nov 28 '13 at 19:22

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