Yeah bone loss is relatively easy to deal with. The biggest problem as I see it is the fact that we’re limited to what we can lift into orbit which isn’t very much.
As far as propulsion is concerned we’re again limited by what we can hoist to orbit. Something as simple as steam exhaust can carry you to a significant percentage of the speed of light but requires billions of gallons of water.
Project Deadelus would have used nuclear pulse engines but ION drives or VASMIR drives could be scaled up 1000 fold or so.
http://news.discovery.com/space/private-spaceflight/tau-zero-project-daedalus-icarus-110119.htm
We need a Space Elevator!