A VCD is a Virtual CD-ROM. It is a small partition on the DL3 hard drive that appears and functions like an ordinary CD-ROM volume. It is read-only and your host system recognizes it as a physical CD-ROM. 

The DL3 has a free utility that allows you to "burn" a standard ISO disk image up to 4GB in size to your VCD. Since the VCD is an exact mirror of your ISO drive image, the partition is not encrypted however it is only accessible after you have entered your password. 
With the DL3, you have the option of enabling or disabling the VCD if you are logged in as the Administrator in the System options menu. 

The DL3's unique VCD option allows you to create a virtual CD-ROM from any standard ISO drive image of up to 4GB in size. The virtual CD-ROM is read-only and only visible and accessible once you authenticate your DL3. It can also be disabled by the DL3 Administrator. 

An example of how this can be used is: 
Virtual Machines - The DL3 VCD can be used to carry a read-only copy of a virtual machine such as VMWare, Ceedo, or Portable Apps. Since the VCD is read-only, your virtual machine is impervious to virus and malware attacks. A DL3 running a virtual machine off the VCD can serve as an encrypted, secure, low TCO, laptop replacement.