Unencrypted backup asks for password

As you can see from the screen capture, I have an unencrypted backup for my wife's iPhone that was created during the iOS 5 upgrade process. The problem is that the restore asks for a password, and doesn't recognize the password I would have used.
Again, as you can see, the padlock icon is missing in the device backup line; it is definitely not encrypted. Also, I installed Elcomsoft Password Recovery and it says that this backup is an unencrypted backup.
I had other backups that were encrypted, but I deleted those to make sure that I wasn't looking at one of them during the restore. It still won't do it.
Is the backup corrupt, or am I missing something?
Thanks in advance for the help.

I don't think that is it - I searched for all the text in the dialog in the file that you mentioned and couldn't find anything. I get the message form iTunes and other programs too.
see http://flickr.com/photos/ivanstorck/317475966/ and
for http://flickr.com/photos/ivanstorck/317475838/
for screenshots

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