Hello @David Toseland
Thank you for contacting us!
What is the classification of encrypted VM which we are talking about? With AAD or without AAD? In both the cases, drives would be restored along with templates and would need to deploy manually. But after deploying , I expect the ADE settings also to be restored. IN case of encrypted VMs with AAD, ADE settings would be available in OS Disks only and in case of without AAD the settings is at disk levels which means each disk would be having ADE settings flag.
IMO the ADE settings would be restored even for encrypted VMs without AAD.
As mentioned if you are restoring from a point in time RP when VM was encrypted, the ADE settings/extension are expected to be restored. From your description of issue looks like the ADE extension was not restored when the template was deployed and hence the VM didn’t boot up. In this case reinstalling the ADE extension should solve the issue.
HTH!
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