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Source: Microsoft Support
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If we attempt to copy a Local Encrypted File to a Network Share of a Windows 2003 Server.
We receive the following warning message:
"The file 'file_name' cannot be copied or moved without losing its encryption.
You can choose to ignore this error and continue, or cancel.
IGNORE IGNORE ALL CANCEL
Clicking IGNORE copies the Files on the Network Share in plain text (unencrypted).
To prevent the profile creation, follow the below procedure.
Solution is to disable the Encrypting File System (EFS) on the server.
Method 1: Edit a domain-level group policy
In the console tree, go to the following location: Computer Configuration/Windows Settings/Security Settings/Public Key Policies/Encrypting File System
Right-click Encrypting File System, and then click Properties.
Click to clear the Allow users to encrypt files using Encrypting File System (EFS) check box.
Essentially this Group Policy sets below registry keys and values which are checked by EFS during user operations.
Method 2: Turn off EFS for the standalone computers (non-domain joined)
Important This section, method, or task contains steps that tell you how to modify the registry. However, serious problems might occur if you modify the registry incorrectly. Therefore, make sure that you follow these steps carefully. For added protection, back up the registry before you modify it. Then, you can restore the registry if a problem occurs. For more information about how to back up and restore the registry, click the following article number to view the article in the Microsoft Knowledge Base:
HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows NT\CurrentVersion\EFS\ Value : Efsconfiguration -> DWORD 1
Please note that disabling EFS will of course not allow using file encryption on the Server where the change is made.
This is expected if the server is not Trusted for Delegation. (Does not support encryption).
This also creates the Profile on the Server for the User copying the File.
The Profile does not create anything (Like Users Private Key's of the certificate) Just an empty folder.
If the numbers of users are high in count, this will pose a problem on server consuming disk space.
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