If you’re using truecrypt in Linux and have been change to new kernel or just to start with it, you need to set loop module for kernel using modprobe, or you’ll get this error message “Failed to set up loop device”.
use this command (as root):
or take a while with tee and append new module file to modules-load.d directory:
tee /etc/modules-load.d/truecrypt.conf <<< "loop"
Hope it help you…