The way I got it to work was to right click on the virtual drive and choose 'SHOW CONTENTS', which is really not normal. I have rebooted the Mac twice which made no difference.
I have to select the virtual drive.. then right click it to show folder contents, then open these folders.. and even then I still don't have folder permissions and still have no 'right click encrypt' option at all in any of these folders.
I had to navigate down 4 levels of directories before I was able to only drag and drop anything into the folder to be encrypted.
Thats completely nuts!! The Classic version gave me none of these crazy issues. I can't see myself using this at all.