OS Windows 7 x64 RC1, Vista Ultimate, XP Pro CPU AMD 955 Memory 4 gigs - 1333 Graphics Card 5750 Monitor(s) Displays i-inc 28" Screen Resolution 1920x1200
If you have the Compress contents to save disk space box checked, then that would be why Encrypt contents to secure datais grayed out. You can only have one of them checked instead.
If not, the check using the tutorial below to make sure that EFS encryption is still enabled.