Confirmed. Created simple file named 'encryption-test.txt' containing simple sentence. Encrypted using default settings and 'test' as the password. Following encryption, the file was gone from the folder in which I created it. I searched the entire drive - no file. I did this twice with the same result.
Follow-up: I did the same test using a Word 2003 document - simple filed named 'encryption-test.doc' containing 1 word created in the same folder as above. Encrypted using default settings and 'test' as the password. Following encryption, which appeared to proceed normally, the file was gone. Again, searched entire drive - no file.
I tried File Recovery on the subject folder. PT found the 2 'encryption-test.txt' files and the 'encryption-test.doc' file, but the file names had been altered. I renamed the files to '.txt' and '.doc' appropriately, and tried opening using File Tool, Decrypt. When opening, the password was requested, but the files contained gibberish.
The recovered '.txt' files had been renamed to 0000006A.255 (or something similar) and the recovered '.doc' file had been renamed with an extension similar to '.doc27E9CBD_encrypted'.
Either something is wrong with PT or I'm using the encrypt function incorrectly.