Plausible deniability is a much larger concept than that. Also if they know you're using Truecrypt, the "deniability" of the existence of a 2nd (or 3rd or 4th) OS goes down significantly.
The deniability doesn't diminish at all. You can even testify in court that the drive is encrypted using TrueCrypt and that TrueCrypt has plausible deniability. The whole point of TrueCrypt's plausible deniability is even when you know about the feature, you simply can't mathematically prove whether or not it's being used.
not directly, but their faq pretty clear about a bunch of secondary ( out of band, internet updates duplicated, etc) correlations that could lead to good evidence that the second system exists. pulling that off is noeasy task.
I'm not so sure. TrueCrypt is first and foremost an encryption program. The fact that you have it might suggest that you encrypted something somewhere, but it doesn't directly suggest that you took the time to use its advanced "hidden volume" capabilities. So even if the police can say "hey, this looks encrypted, and you've got nothing else which looks similar, decrypt it for us," they are still stuck on "hey, we didn't find the evidence we were looking for -- maybe you have a hidden volume?". You say "I don't" and the judge says "GRR ARG DECRYPT IT NOW" and you say "I can't, it doesn't exist, I really am innocent, please get the scary men away from me."
It does indeed. However, what are they going to do? Torture you until you give them the "other" password? How can they distinguish whether you just cleaned your hard drive or if you gave them the wrong key?
