just found this on htc wiki
WARNING: If the device is Hard Reset/Cold Booted, the encryption keys will be permanently deled and cannot be retrieved to decrypt the card!
troubleshooting:
When Storage Card Encryption is enabled, the DPAPI master key (decryption key) is stored on the devices internal flash. If the device is hard rest/cold booted, the encryption key will be deleted and cannot be retrieved! When a customer is doing a Hard Reset/Cold Boot, if the device detects that Storage Card Encryption is enabled, it will give them a warning to back up the files from their card so they can be retrieved once the encryption key is deleted during the Hard Reset process. For more information, refer to the Windows Mobile 6 Storage Card Encryption FAQ at the following URL:
http://blogs.msdn.com/windowsmobile/...ption-faq.aspx