Well to amplify some on what Abigail-II said.... You want to create a virtual filesystem on a loopback device.

system ('dd','if=/dev/zero','of=image.raw','bs=1024k',"count=$count");
system ('/sbin/mke2fs','-F','-b 2048','image.raw');
system ('mount','-text2','-oloop','image.raw',"$mntloc");
[download]

So you can do whatever you want with it, encrypt it, etc.