goSecure is a relatively new program that allows drag-and-drop file and folder encryption that is compatible with OS 10.4 and 10.5.
goSecure provides either 256-bit or 128-bit AES encryption options. Data can be compressed if desired and a default location can be designated for all encrypted data. There is also an option to automatically securely erase the original file after it has been encrypted- handy!
Instead of using drag-and-drop I like to use the expanded contextual menu capabilities of DragThing to create an "Open With..." command. All I have to do is control/click on a file or folder, select "Open with goSecure" and the encryption window opens automatically. (I have the right button on my Kensington Orbit programmed as control-click.) Otherwise leaving a goSecure alias on the desktop or dock allows quick access to the program. I prefer having encrypted files remain on the Desktop so I can put them where I want...
I have always preferred encrypting individual files and folders instead of using FileVault or encrypted disk images, which are a hassle to create using Disk Utility. And if data corruption occurs only one file/folder is affected instead of a whole bunch of data...
For years I have used Encryptor from SubRosaSoftware. Unfortunately, Encryptor is no longer supported and there hasn't been an update for quite some time... The program still works with 10.5 but the encrypted files do not show up on the Desktop even though I can access them in the Desktop folder via a Finder window.
goSecure can be used to encrypt data on flash drives, iPods and portable Macs where it is most vulnerable to thieves. Encrypted data can be sent as an attachment in an e-mail message. goSecure is $20 and there is a free thirty day demo available.