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It's not possible to use an encrypted password for the restore. Reason is because if someone gets hold of the encrypted password, e.g. from the backup job, that person can then simply restore the backup without knowing the actual password e.g.
EXEC master..sqlbackup '-sql "RESTORE DATABASE ... WITH PASSWORD = [<ENCRYPTEDPASSWORD>MyEncryptedPassword</ENCRYPTEDPASSWORD>] ...
Also, by not encrypting the password in the restore job, you tend to be more careful with managing access to the jobs.
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While testing with the set up I was checking the backup and restore jobs and statements. I noticed in the backup job, the password for file encryption is nicely encrypted as well, in between tags: <ENCRYPTEDPASSWORD>MyEncryptedPassword</ENCRYPTEDPASSWORD>
I noticed on the restore statement, the password was unencrypted. I tried changing this to <ENCRYPTEDPASSWORD>MyEncryptedPassword</ENCRYPTEDPASSWORD> but that made the statement fail.
Is it possible to configure the restore job with the password beeing encrypted, instead of unencrypted and thus readable? Or is there a reason to leave it unencrypted?