When updating the ACC config file to work with a keystore, it seems to only accept a plaintext password . After restarting it does not encrypt, and it does not seem to accept encrpyted passwords. Why is this? Is this a bug?
Yes - ACC 10.5.x and 10.7 only accepts plaintext for the password fields in its config file.
This will be addressed in the 10.7 SP1 (10.7.1) release.