Yes, we use DDPE (Hardware / SED encryption) and ITMS 8.1. We have not started deployment of 1709 yet but have done deployments of the 1703 feature update. I should note we are not using patch management for this update, we have developed a custom install script. The primary reeason for this is to control the install timing and messaging to the user with a custom HTA wrapper.
We've not run into any upgrade issues related to DDPE. If you have, please share with the community.
Joe