The structural arrangements and magnetic properties of iron encapsulated in single wall carbon nanotubes (SWCNT) are investigated. Fe nanowires are of interest because of their potential use in spintronics. They have also been fabricated inside carbon nanotubes, where occasionally exchange bias has also been detected. An additional motivation to study these systems is to contribute to the understanding of how the iron-carbon interaction determines the magnetic ordering. Here we investigate, using ab initio methods, the geometry and magnetic structure of freestanding and encapsulated Fe nanowires, and also the properties of the nanowire-nanotube system when defects are present in the single wall carbon nanotube. When the ratio of the nanowire to nanotube diameter is small the system is stable and the spin polarization at the Fermi energy is large, thus making the system potentially interesting for spintronics. When this ratio is close to one the system is less stable and a tendency towards antiferromagnetic ordering is observed.