Electrum can encrypt the private keys in wallets with a user entered password. But what encryption algorithm is used? I'd hope it is reasonably strong crypto. I've looked at the Electrum docs and can't find specifics.
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Electrum uses AES-256-CBC to encrypt wallets. The key is sha256(sha256("your password")).
Electrum wallet source: https://github.com/spesmilo/electrum/blob/master/lib/wallet.py
slowaes library: https://code.google.com/p/slowaes/source/browse/trunk/python/aes.py
