I have similar issue and resolved by following steps:
1. Create a new vm with same configuration - let's call this "NEW".
2. During creating the NEW, at the "Choose Encryption" stage, save the generated password in somewhere else like notepad.
3. After the creation, go to "~/Virtual Machines.localized/NEW.vmwarevm"
4. Print the .vmx file and copy the value of encryption.keySafe and encryption.data
5. Go to the encrypted vm - let's say this as "OLD", so go to "~/Virtual Machines.localized/OLD.vmwarevm"
6. Open the .vmx file and replace the value of encryption.keySafe and encryption.data with the NEW's value.
7. Open the VMWare Fusion again and when run the OLD vm, you will encounter the popup for entering the password for encryption.
8. Paste the password you saved on step 3. and you can now access the encrypted vm.
I tested with Windows 11 Arm on VMWare Fusion 13 and VMWare Fusion 25H2.
Hopefully this would be helpful to someone like me who uses both Keychain Access and Password app on MacOS Sequoia and lost the saved password by somehow.
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Original Message:
Sent: Oct 28, 2021 10:08 AM
From: erik5678
Subject: VM encrypted itself, don't know the password
Back when Windows 11 was released I tried to encrypt my Windows 10 VM so I could add the TPM, but it failed. Since then I've been running Windows 10, but decided to try the new managedVM.autoAddVTPM = "software" flag when Fusion 12.2.0 was released. It worked and the Windows 11 upgrade tool now only complains about my i7-7700K being unsupported.
Today however when I started Fusion, I got a dialog saying something along the lines of "Encrypting VM" and there was a progress bar. Now I find my Windows 10 VM to be encrypted, and I don't have the password. The password I used when trying to set up encryption before when it failed does not work. Empty password does not work.
I'm not sure what to do now. If I can't remove the encryption from this VM I'm risking losing access to this windows license in the future, and if I restore from a backup of this VM it's going to be old and not have the latest software. The backup is also pre EFI conversion. Is there any way to remove the encryption? It never asks for a password (so far).