I encrypted my VM and now cannot decrypt, password is not accepted.
The purpose of encryption is to ensure that only somebody who is authorized to access data (e.g. a text message or a file), will be able to read it, using the decryption key (password). Somebody who is not authorized can be excluded, because he or she does not have the required key, without which it is impossible to read the encrypted information.
Parallels Desktop Support will not be able to assist with such case, because due to security reasons password is not stored locally. In order to gain access to the encrypted virtual machine, you will need to recall the password.