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Cylindrical ferromagnetic nanowires encapsulated inside multiwalled carbon nanotubes (MWNTs) are synthesized by pyrolyzing either ferrocene powder or ferrocene&-toluene mixtures. By changing the way the precursor is thermolyzed, we have been able to control the composition of the ferromagnetic byproducts. In particular, we noted the coexistence of alfa-Fe and Fe3C phases when only powder ferrocene is theromolyzed in an inert atmosphere. However, when toluene-ferrocene solutions are sprayed and thermolyzed, only Fe3C nanocrystals are produced. Magnetic measurements of the aligned nanotubes containing these cylindrical nanowires revealed large coercive fields as high as 0.22 T at 2 K. Interestingly, these magnetic coercivities strongly depend on the Fe particles' diameter, and are not affected by the length of the particles, which was also confirmed using micromagnetic simulations. Our experimental and theoretical results indicate that short and well aligned carbon nanotubes containing narrow ferromagnetic nanowires (i.e. 5 nm diameter and 25 nm long) would be suitable for producing prototypes of magnetic recording devices.