What you're looking for is on-the-fly decryption (and encryption if the user wants to modify the file too). On the one hand, most encryption in .NET is implemented through CryptoStream which is hardcoded to return false for CanSeek, on the other hand, seeking through an encrypted file (that is, jumping to a block immediately without decrypting the previous block) is possible if you use block cipher that supports random access decryption, you can have for example 7 GB of an encrypted video file and only decrypt the few bytes you need once at a time to allow user immediately playing, even jumping around the videos without decrypting the whole content. No large RAM or temporary files needed.
The problem is, while it's comparably trivial to allow seeking on your custom derivation of CryptoStream, the resulting stream is only readable by your app. You probably could set-up a decrypt-recognize file type-play/display file flow in your own app, but you'd have to support every filetype out there.
Instead, apps like VeraCrypt, Cryptomator, and BitLocker create a virtual drive to intercept calls like "give me byte 7-13 of file A.MP3" to translate into a decryption call and return the appropriate decrypted bytes (and vice versa for writes). You're no longer hobbled with supporting every file type, it's compatible with whatever user's 3rd party app to handle them like a regular file on a real drive. Doing this requires writing low-level drivers that can't be done on C#.
If you're wondering why bother creating an entire virtual drive when seemingly capturing each file into its own container is enough, modification to the file might leave portions of deleted or old blocks in the file system, this can be used by adversaries to attack the encryption. So you can't use your "Test.lock" paradigm in your app. Instead, it will be a mounted virtual drive/directory. The combination of cryptographic gotchas (since you're no longer using built-in libraries), the difficulty of implementing the low-level drivers, and the existence of built-in BitLocker, free & audited VeraCrypt means the chance for a yet-another encryption solution to succeed is low.