Hi Jay,
There can be a lot of difference depending on the exact file format. If you password protect a 97-2003 office document this is only encrypting the text of the document, and not the infectable parts (eg. macros, embedded files). This is unlikely to trigger an 'Unscannable' error in our engine.
However, newer office 2007+ documents (eg. PPTX and DOCX) effectively encrypt the whole file when password protected. Therefore the 'Unscannable' error would be legitimate. Depending on what product you are using there are different ways of handling unscannable files, so let me know if you need any configuration help.
If you can actually reproduce this with a file that isn't password protected then please call into support and we'd be happy to look at a sample.
Thanks,
Tom.