I don't think encrypted drives would work, I don't see a way to configure encryption in the SRM interface. But, like AP Time Capsules which don't support encrypted disks (at least that I recall), you can choose to encrypt your backups when you select the TM destination disk.
- SRM recognizes the following formats: EXT4, EXT3, FAT32, FAT, HFS, HFS Plus, and NTFS. Any unrecognized external drive will have to be formatted first before being used in the system.
- Journal is not supported on HFS/HFS Plus.
- SRM will only format in FAT32 or EXT4.