OS X Encrypted Disk Image Tool Buggy?

Hi,
I'm trying to create an encrypted file directory on an external HDD (My Book). I decided to try the OS X software to create one. I have tried both the following options, each of which has been buggy when transferring files into the created images:
* 50GB Encrypted "Sparse Disk Image"
* 50GB Encrypted "Read/Write Disk Image"
CASE 1 - "Sparse Disk Image" - errors occur when loading data/files into these images. When I check them via Verify the Disk Utility says there is a "Invalid B-tree node size" and the repair does not work.
Questions:
[1] Is this a known Apple OSX bug?
[2] Is there a way to lodge a bug request with apple?
[3] Is there a well known/popular folder/file encryption Mac software package that works that someone could recommend?
Details from the logs:
Jul 1 16:48:43: Disk Utility started.
Verifying volume “raw_data”
Checking HFS Plus volume.
Invalid B-tree node size
The volume needs to be repaired.
Error: The underlying task reported failure on exit
Disk Utility stopped verifying “raw_data” because the following error was encountered:
The underlying task reported failure on exit
1 HFS volume checked
Volume needs repair
Verify and Repair disk “raw_data”
Invalid Volume Header
Checking HFS Plus volume.
Invalid B-tree node size
Volume check failed.
Error: The underlying task reported failure on exit
Disk Utility stopped repairing “raw_data” because the following error was encountered:
The underlying task reported failure on exit
1 HFS volume checked
1 volume could not be repaired because of an error
CASE 2 - "Read/Write" - Failed trying to create image:
Jul 1 17:15:19: Disk Utility started.
Creating Image “raw_data.dmg”
Initializing...
Creating...
Finishing...
Unable to create “raw_data.dmg” - Illegal seek.
Thanks
Greg
MacBook (Intel)   Mac OS X (10.4.10)  

Is the external drive a USB drive formatted as FAT32? If it's USB and you're using it "out of the box" without having reformatted it, then it's probably FAT32.
FAT32 filesystems can't properly hold a file larger than 2GB. I ran into this with a pocket size 12GB USB drive. Once the sparseimage file gets close to 2GB, things go haywire.
If you don't need to share the drive with Windows machines, reformat the drive as Journaled HFS+, and the problem should go away. Otherwise, keep the sparseimage files well under 2GB.

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