Question: Is it possible to encrypt a single directory (or a group of directories) on a Mac? I don't mind if I have to use third-party software.

Answer: 
The two solutions below may be of use for you.

<http://agilewebsolutions.com/knox>

<http://www.taoeffect.com/espionage/>
For a third party solution I would recommend PGP whole disk encryption
<http://www.pgp.com/products/wholediskencryption/index.html>