Could you please be a little bit more specific about your configuration. By "windows partition", do you mean a windows partition on a linux box, or on a network share, encryption from within linux or from within windows?
I assume you are trying to encrypt a fat partition on a linux box, which is - of course - not the root partition of your linux installation. Yes, it is possible. Loop-AES works independantly from the type of your file system. If your linux box supports a specific filesystem, then you can use that filesystem along with Loop-AES. Loop-AES works with a patched version of 'mount', which itself uses gpg to achieve encryption.
So here is a short diagram to show the dependencies:
[physical block device] <--> [loop device] <--> [mount point in your directory tree]
The connection between [physical block device] and [loop device] is achieved through 'losetup', the connection between [loop device] and [mount point] is achieved through the patched version of 'mount'.
You are free to choose whatever filesystem you want to sit upon your loop device. After setting up your loop device with 'losetup', you may create a filesystem with 'mkfs', e.g.:
Code:
mkfs -t vfat /dev/loop3
Hope this is what you meant,
Roland
P.S.
Personally I would prefer DM-Crypt over Loop-AES. It uses a device mapper target instead of a loop device, and doesn't need a patched 'mount' version.