This might help you if you encounter the same problem…
When I last connected up my iPhone to my laptop it prompted me to install the latest updated to iOS – which I did, naturally.
Unfortunately, when it tried to do a backup of the iPhone it complained that the phone insisted on encrypting the backup. It’s my phone and I hadn’t changed the setting.
My first thought was that the latest iOS update was the problem – but I was wrong.
Since my last PC sync with the iPhone I’ve connected to a company internal BYOD style wireless network. As part of that setup some profiles and certificates were installed on the phone. I think this is what has flagged to the phone that backups should, in future, be encrypted.
So, I gave in and set a password.
Unfortunately, it refused to accept the first password I tried – so I provided several others – including the lock code for the phone and various other variations.
When if finally stopped complaining I checked and found that the first password had been accepted and used after all!
My advise would be to make sure you keep a record of any passwords you use in case this happens to you – and in case you ever wish to restore in the future.
Hope this helps.