On a Windows 7 laptop I was trying to set up Offline Files with encryption enabled. After syncing the files and going into Manage Offline Files -> Encryption -> Encrypt everything seemed to go OK, but it would then keep reporting Access Denied when it tried to sync any new files.
After some searching I found this post which mentioned an expired Recovery Key in Group Policy. After checking the Group Policy object on the server I discovered there was an old Recovery Key stored in the EFS policy from when it was first set up. After regenerating the key and importing into policy, a gpupdate /force on laptop and reboot fixed the issue.
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