I noticed this problem early last year but I wasn't really sure if it's a bug or not. During the Backup and Restore operation, the encryption feature does not seem to work at all. Even after entering the password twice and stuff, the resulting backup file can still be easily opened up in both Directory Opus or archiving programs (after changing extension to .zip). I'm sure this isn't intended at all.
Did you try extracting data from the file?
The directory listing isn't encrypted, but the data is. So you can open the zip file and see the filenames, but you need the password to read any of the data inside the files.
AFAIK, Zip does not actually support encrypting filenames. 7z and RAR do, but not Zip.
e.g. WinZip KB: Filenames display without entering the password when an encrypted Zip file is opened
Yeah I tried extracting and could read the content of the files.
After typing that above, I tried Backup a new file and this time they all have asterisk in their names which means they are encrypted this time. That is very weird! I decided not to report this for quite a while and during that time, it does not work. Now that I report it, it decides to work!?
I must be going crazy. Ok. No worries. This bug-report is invalid 
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