(1) Some files (Images, text, html, flash, streaming media files) can be directly viewed in IE, while others require external applications. If the files cannot be previewed in IE, it displays cannot be previewed. But of course, you can view it from the application that created the file.
(2) Please note DriveHQ encrypted folder is very secure and private as your files are encrypted locally before it is uploaded. The encryption key is never sent over the network. DriveHQ client applications cache the encryption key locally; when you upload files, they are encrypted and then uploaded; when you down the files, they are downloaded and then decrypted automatically using the cached key.
If you need to access the files from another PC, then you need to enter the encryption key. If a hacker gets access to your encrypted files, he must also have the key to decrypt it.