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Access is your best bet - as long as you have a standard Windows installation, you don't actually need Access to be able to open mdb or mde files. Just JET, which is part of MDAC. In Access (or XML), you can encrypt part of the data using your choice of algorithm (System.Cryptography in C#, if memory serves) and then write out the bytes in base 64.
You could use SQL Server pretty easily, depending on what "hot" means, exactly. The USB memory should attach as a drive, and get a specific letter. So you can use a file path on that drive to create your database. Then attach and detach it when you want to plug the USB into the computer, and take it on the run.
Given the somewhat large scope of the project, I'd highly recommend using the skills you've already got, rather than learning a new language from scratch. C# is amazingly expressive, possibly the best all around programming language there is right now.
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