The error that you are getting is a different one. All its asking you is to specify an encryption password when creating the archive as given below:
msdeploy -verb:sync -source:metakey=lm/w3svc/2023696167 -dest:archivedir=c:\temp,encryptPassword=mypassword
When you deploy the archivedir you would need to specify encryptpassword again. This is for your security since it has sensitive data.
You can read more about encryptPassword with examples here