Symptoms

I am unable to encrypt SmartBox SmartObject properties

Diagnoses

This "Encrypt Property" Smartbox Setting is only accessible using a thick client designer (K2 Studio/K2 for Visual Studio):
http://help.k2.com/onlinehelp/k2blackpearl/userguide/4.6.7/webframe.html#Reference_-_SmartBox_Settings.html

Please use the "Save to Local" feature as per documentation below to save the Smartbox Smartobject to a local project, make the necessary changes, and redeploy the Smartobject: https://www.k2.com/onlinehelp/k2blackpearl/userguide/4.6.7/webframe.html#reference_-_editing_a_workflow_smartobject_.html

Resolution 

After looking at the above documentation, we were able to encrypt the data.