[citation][nom]MoUsE-WiZ[/nom]2) They say it's secure if the drive is disassembled, but the password and AES key both need to live somewhere in it. It might be hard to hack, but I'm sure it's hackable through disassembly.[/citation]
No, that's not how good encryption works. I'm not endorsing this USB stick as "good", it may or may not be, I don't know... The password is used to generate the much larger (256-bit in this case) decryption key on the fly and then discarded. The password doesn't have to be stored anywhere but in your head, and the decryption key is also not stored and only used to decrypt the data while it is needed, then disappears when you're done with it. If you get the password wrong, then the generated decryption key will be wrong, and the end result will be "garbage" data. The ONLY way to know that the password was correct is that the decrypted data will be, well, decrypted (not garbage). Usually the software looks for some well-known data in the decrypted data and if it sees it, it knows the decryption key is correct, otherwise it asks you to try again.