The Distro that I've been working with and testing is called TAILS. It is based on Debian. You can get a copy and read the documentation here: https://amnesia.boum.org.
I have it installed on a USB flash drive. It works perfectly on my computer, however there is one thing that it does not do that I wish it did. When ever I turn my computer off, I lose all my settings and mail, files ... everything.
I would like to be able to save the settings that I make as well as any files that I upload/download or create onto the USB drive. I think this is called persistence ... I'm not sure though.
I would also like to have those files and settings encrypted when saved to the USB. I think that TrueCrypt can do this.
So what I would like is a bootable USB drive with TAILS installed, a TrueCrypt container to store any settings, mail, files, etc. ... AND have TrueCrypt run from the same USB drive. All this should be done within the TAILS environment so that that host computer is not touched ... everything is run from the USB.
Is this possible? I would also ask that you set this up and send it to me as an .img file which I can then put onto any USB device that I chose.