Time to spread a smidge of dirt on Microsoft :).
One of my favorite dialog boxes is found in Outlook. If you dig deep enough into your email accounts, you'll find the following dialog box:
The reason I like this dialog box is the default setting "Compressible Encryption". Why? Because if you select it, you're not encrypting ANYTHING. "Compressible Encryption" is really "compressed". When this option is selected, the data in the OST in specified is compressed (I'm not sure of the algorithm).
Calling a compressed OST file "encrypted" is sort of like saying that a ZIP file is an encrypted version of the file. After all, if you look at the contents of the ZIP file, you'll not find any the information directly represents the original file (ok, the filenames might be in the archive uncompressed but that's about it). But of course it's not encrypted.
If you specify "High Encryption" then you get a truly encrypted OST file. I'm not sure of the algorithms they use, but it IS really encrypted.
So why on earth do they call it compressible encryption? Well, I'm not 100% sure, but I suspect that the answer is that some executive decided to type their PST file (or OST file) and noticed that their email was found in clear text within the file.
They also noticed that if they used compression on the PST file, then they weren't able to see the contents of the file. So they equated compression with encryption (hey, they couldn't see the data, could they?). And thus "compressible encryption" was born.
It's really just a silly affectation - they should never have called it "encryption" because someone might think that the data's actually hidden, but... If the dialog was being designed today (the actual dialogs over 10 years old), the term "encryption" would never be used but nowadays it's sort-of a historical oddity.
There are other examples where similar obfuscation has occurred, and I'm sure that other vendors have done similar things (or worse). For example, the Exchange MAPI client-to-Exchange Server protocol is obfuscated because an executive noticed that if he took a network sniff of the traffic between his client and the Exchange server he could see his email messages going by. So he asked the team to obfuscated the stream - we knew that it did nothing, and so did the executive, but as he pointed out, it's enough to protect from casual attackers. If you really want encrypted communications, then if you specify the "Encrypt data between Microsoft Office Outlook and Microsoft Exchange Server" option in the Security tab of the Microsoft Exchange Server dialog, then that specifies RPC_C_AUTHN_LEVEL_PKT_PRIVACY, which uses a encryption mechanism to protect the data (I believe it's DES-56 but I'm not 100% sure). I believe that this option is the default in all current versions of Outlook, but I'm not 100% sure.