I had a similar issue.
Created an account with encryption for cloud use, no local server
I had to manually create the following two files, as at no point was this done for me, and the files were not in the places suggested by the documentation.
C:\Program Files\PlasticSCM5\client\cryptedservers.conf
C:\Program Files\PlasticSCM5\client\encryption.key
cryptedservers.conf
organisation_name@cloud encryption.key
encrypt my password from the command line using the command, and through trial and error find the correct format for the key file to be two fields, <encryption method> <string created by cm crypt command> AES128 works for me, but there are other possibilities.
PS C:\Users\adrian> cm crypt password123
ENCRYPTED: |SoC|YPUeioTz4NqG+n63ZDlw2jwhQDdnFarU
encryption.key
AES128 YPUeioTz4NqG+n63ZDlw2jwhQDdnFarU
Hope this helps someone, I'd be interested to find out if I missed something that meant the files were not created
Thanks,
Adrian.