the volume key which is used to encrypt the files is generated in the following way when creating a new encrypted folder:
1) A temporary key with 384 bits is randomly generated
2) A temporary salt with 160 bits is randomly generated
3) The volume key is generated using PBKDF2 standard with the temporary key and salt as input and 1000 iterations. See http://en.wikipedia.org/wiki/PBKDF2
The values are randomly generated using the .NET class Random (http://msdn.microsoft.com/en-us/library/system.random.aspx). Even though, the generated volume key is very secure by applying an additional PBKDF2 key derivation, we'll replace the Random class with RNGCryptoServiceProvider class in the next version.