It was time to start being a bit more security conscious and encrypt my external backup drive.
The server is a massive piece of 4U rack but the backup drive is just a swipe away so...
Note: the server is a Debian Lenny system.
It all went pretty straightforward after following first this guide which should help you setup your encrypted partition and this guide to create a key file. Don't bother editing /etc/crypttab.
To use the key file:
cryptsetup --key-file=/etc/keys/keyfile.luks luksOpen /dev/backupdrive myencrypteddrive
Backup script is now running and the crypt daemon is now heating up my cpu nicely.