As for the Truecrypt issue, make sure you download the 32-bit file for 32-bit systems. If you download the 64-bit it won't run and may tell you that it is corrupt. Also be sure you extract it properly (don't open the package and drag the file out) this sometimes works, but sometimes it has problems.
Once you get Truecrypt installed, locate the binary. It's either in the /bin folder or /usr/bin I can't recall at the moment, but find Truecrypt and copy that to a small FAT partition of the USB drive.
You will want to have one small unencrypted FAT partition, and the rest of the USB stick encrypted, the small drive will have the compiled binary to run truecrypt on that distro.
If you plan to run Truecrypt on multiple distros, like one that uses deb and one that uses rpm, then be sure to compensate for this and create a folder on the smaller partition containing folders with each distros truecrypt binary, you could even include a windows version.
If you plan on mounting on windows, it would be easiest to use a windows native file system on the encypted drive, such as FAT or NTFS as Windows cannot natively read linux file systems without the use of special drivers.