To correct this issue you need to install the agent key material password into the AppManager 7.x database. Use the NQKeyGenWindows utility to add the key material to the database:
NQKeyGenWindows -db db_name:username:SQLServerName -agentpwd password
Note: replace password with the correct password for the agent key material
In AppManager 6.x stored some information related to encryption and authentication in the AppManager Repository. Thus, when performing new agent installs in version 6.x you would be prompted for an encryption key so that the key could be installed along with the agent.
This behaviour has changed in AppManager 7.x. In AppManager 7.0 and above all encryption details are now stored in the AppManager Repository. Thus, when installing AppManager Agents in AM 7.x you are no longer prompted to provide the encryption key during the installation process. Instead, after the agent is installed and started the service queries the Management Server for the agent key material.
AppManager Repository databases with encryption that were installed as AppManager 6.x or earlier will not have all the necessary information in the database. Upgrading that database to AppManager 7.x does not add the needed information.