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Let say I use Eraser (or other tools) to erase my hard drive (using DoD standards which is 7 times or Gutmann which is 35 times),

These eraser tools just write random data on the hard drive many times correct?

Also if encryption looks like random data, how can anyone say its encrypted or not without you confessing?

If I were to erase one of my hard drives now, so I can sell it without anyone snooping on it easily, and the authorities seized my computer and told me to decrypt the hard drive… Well, I can't!

What I'm asking is, do TrueCrypt volumes look like random data?

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Yes, TrueCrypt volumes look like random data. This is mentioned in the Plausible deniability section of the TrueCrypt FAQ. The FAQ even mentions that having just erased a disk is an excuse for having a volume full of random data. I hate to call it a plausible excuse because as a rule people don't keep such volumes around.

If your disk is seized and found to contain random data, it'll look like you either have an encrypted partition or you've just erased it. Either case will look suspicious. Far better to fill it with halfway-useful stuff like a spare, bare OS installation.

Note that making multiple passes when erasing data is largely a myth; it's neither required nor necessarily sufficient to erase all traces of prior existing data, nor is overwriting with random data a significant improvement over zeroing. See How can I reliably erase all information on a hard drive?, Why is writing zeros (or random data) over a hard drive multiple times better than just doing it once?

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I think it was required at the time those standards were created, but no longer due to the increased density of moders HDDs. –  CodesInChaos Jan 25 '12 at 15:05
    
@CodeInChaos - It is still required to a certain degree. Of course in order to do any of the stuff that multiple passes prevents even requires hardware and knowlege very few people have access to. If you are using encryption because you are breaking the law, and want to prevent being charged with a crime, then you are really using encryption for the wrong reason. Encryption is used to prevent a person from view your data without your password. –  Ramhound Jan 27 '12 at 14:40
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