Encrypting is a method provided by ESRI to codify source code programmed with the Avenue Scripting language. In contrast to other programming languages Avenue code thereby is not saved in compiled mode; instead the full source code including remarks is encrypted by a single algorithm. The encrypted source code is decrypted by ArcView so that the scripts can still be executed, even if the source code can not be read by human beings.
Help! I encrypted my project!
Encryption is not
a safe method to protect Avenue source code. Every encrypted Avenue
source code, be it inside of a project or an extension, can be
unencrypted easily with the ArcView extension Scripttool Pro. Since 04/2005 I
don't sell this extension anymore because of possible misues of the
software. If you my have encrypted your project, extension or script, and have no access to
the current original version, you can send it to me (with a statement
that you are the author) and I send you an unencrypted version. If You
have any comments or questions
concerning unencryption you can also send an email to me:

Here you find
some different reactions on my unencryption project:
Conversation with Bruce Cheney (GIS Development
manager, J-U-B Engineers, Boise, ID) about unencrypting Avenue
scripts [english]
Conversation with Damian
Spangrud (ESRI Product manager, Redlands, CA) about unencrypting
Avenue scripts [english]
Konversation mit Thorsten
Behrens (Uni Gießen) über Entschlüsselung von Avenue Scripts
[deutsch]
Konversation mit Dirk Loss (Uni Münster) über
Kryptographie und freie Software [deutsch]
More about unencryption:
I found that I wasn't the first to
decode Avenue encryption.
In 1996 Mark
Ontkush published a full description how Avenue
encryption works and how it can be decoded.
In 1999 Bill
Huber , an Avenue programmer who is extensively posting scripts on
the ESRI download site, cracked Avenue encryption, but decided not to
publish the procedure. Bill Huber is certainly the developer who has
been engaged most intensively with Avenue decryption, so feel
encouraged
to visit his website. The site also provides a tool called Uglify.
It is a method to make Your decrypted source code look so horrible that
nobody may find any sense in it. Uglification is certainly the more
reliable way to protect Your source code if You are looking for
alternatives to insecure encryption.
Homepage: http://www.ecogis.net
Deutsch: http://www.ecogis.de/