> However, in 
> CFS you can still see the file structures, and read the file names.

You can see the filestructure and size, but the filenames are encrypted
to. They look like MD5 checksums, so you won't be able to map them to the
real file.
 
> Now, my question.  Is it possible to use both CDG and CFS on a machine
to 
> ensure a high level of local security while also maintaining security
while 
> the machine is on a network?

Sure you can. I use CGD and CFS on my Laptop. CGD encrypts wd0f (/home/)
and CFS is used for some paths like home/stefan/mail and
/home/stefan/.gnupg to protect my GnuPG-Key and my mailbox. 

If I have to use my  laptop eg. on a convention, i'll cgdconfig wd0f to
get my ~ but I won't mount my CFS filehierarchy to protect the files.

But beware: a mounted CFS can be hacked via UID spoofing. If root su's to
stefan he can read the whole mounted CFS-hier. 


BTW: I wrote a short howto on CFS and NetBSD, it's available at 
http://www.net-tex.de/unix/cfs.html