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ATI 2011 latest build and Truecrypt full volume encryption

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I thinking about encrypting my windows pc's. Now if I do a full encryption will true image still work from within windows and just create an unencrypted backup.
Or will it do a sector by sector backup and create a huge file?

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Frankly, I would stay away from using ATI wil TrueCrypt. Of course, you could ATi to create backups in Windows and you could use these backup to restore files and folders. But to restore your system you will be in trouble.

You can also create a sector-by-sector backup from the recovery CD.

You can also decrypt your disk, backup your OS and system, and rencrypt it until the next OS/system backup and backup files in the meantime.