In Windows 7 offline files cache can be encrypted as described below. 
- Launch offline files management window(Execute ‘control c:windowssystem32cscui.dll‘ from Run or see the post Enable offline files in Windows 7.)
- Click on Encryption tab
- Click on Encrypt button
Now you will see the text “Your offline files are encrypted. Further items added to offline files will be encrypted.” in the offline files window.
I am trying to enable offline file encryption, but do not have the Encryption tab under Offline Files. I am running Windows 7 Enterprise (x86) and have set a network folder to "Always available offline" as well. When I go to Sync Center, and click on Manage offline files, I only have three tabs; the Encryption tab is missing. Any idea why this would be?
You need to verify the following..
1) Check if EFS is disabled on your system..try encrypting your local disk files.
2)Run gpresult from cmd and check if any offline files group policies are enforced.