Is it possible to use TrueCrypt without leaving any 'traces' on unencrypted Windows?

Yes. This can be achieved by running TrueCrypt in portable mode under BartPE. BartPE stands for "Bart's Preinstalled Environment", which is essentially the Windows operating system prepared in a way that it can be entirely stored on and booted from a CD/DVD (registry, temporary files, etc., are stored in RAM – hard drive is not used at all and does not even have to be present). The freeware Bart's PE Builder can transform a Windows XP installation CD into BartPE. As of TrueCrypt 3.1, you do not need any TrueCrypt plug-in for BartPE. Just boot BartPE, download the TrueCrypt self-extracting package to the RAM disk (which BartPE creates), run it, extract its content to the RAM disk, and then run the file 'TrueCrypt.exe' from the RAM disk. Note: You may also want to consider creating a hidden operating system (for more information, see the section Hidden Operating System in the documentation).  more