The AMI was created using an encrypted instance\snapshot.

However, the MCS machines appear with identity disk "Not encrypted" 

When using master encrypted master image, ensure the snapshot used to create the AMI is preserved as Citrix needs to fetch the "Encrypted" property from this and apply on MCS child machines. 

Or use a machine profile that suits the requirement.

Problem Cause

The property "Encrypted" is tagged to snapshots & volumes but not directly to AMI. 

If the snapshot associated doesn't exist for the selected AMI, this behavior is expected.