Strictly opinions - some completely uninformed…
Any Debian, Fedora, Arch based distro is fine. Avoid Ubuntu but Ubuntu-based should be fine (ie Mint, Elementary, etc). Biggest determinant should be compatibility with your hardware and also your comfort level with distro.
Keep it simple - encrypt the whole disk. I believe TrueCrypt had a much larger following in the Windows world. LUKS is the standard on Linux. High scrutiny is good when it comes to crypto. Actively maintained and well-supported on every distro. Arch has the best docs on many topics: Data-at-rest encryption - ArchWiki
What I’ve posted in the past about hypervisors:
malware and whonix - #5 by entr0py
Need ISO files to install in Hyper-V and Vmware - #5 by entr0py
Good if you’re constantly on the move (and avoiding video surveillance). If plan is to do this from home / office, don’t bother. If you’ve been filtered down to 1-2 blocks, all is lost. At that point, surveillance switches from dragnet infosec to behavioral / financial profiling and white vans.