When you attempt to encrypt or decrypt a file or folder, you may receive an error message similar to the following example:
Error Applying Attribute
An Error occurred applying attributes to the file:
Access is denied.
If you click Ignore, the files that generated the error message are not encrypted.
This behavior occurs if the permissions on the System Volume Information folder are modified so that System cannot write files. Encrypting File System (EFS) uses the System Volume Information folder on each volume to store its log file that is generated during the encryption and decryption process. By default, the System security principal has Full Control of that folder.
To resolve this behavior, give the System security principal Full Control over the System Volume Information folder.
NOTE: The System Volume Information folder is a hidden operating system folder. To expose the folder in Windows Explorer, use the following steps:
On the Tools menu, click Folder Options.
On the View tab, click to clear the Hide protected operating system files check box.
If you need to modify the permissions of the System Volume Information folder, you can grant the local Administrators group Full Control over the folder. The System account is a member of the local Administrators group by design.