Option 1. Remove the encryption from the Temporary Internet Files/Content.MSO, Content.Word subfolders.
Option 2. Disable EFS encryption support on the server
VALUE: 0 = encryption is ENABLED, 1 = encryption is DISABLED
Option 3. Enable the server for Trusted Delegation. This will allow the server to impersonate the client and create a profile with certificate for encryption on the server.
Enabling Delegated Authentication http://technet.microsoft.com/en-us/library/cc780217(v=ws.10).aspx
The subfolders are very hidden, system protected subfolders of the Temporary Internet Files folder
Example: C:\User\<user name>\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.MSO
On Windows 8 and Windows 10, the Temporary Internet Folder is now "INetCache"
Example: C:\Users\<user name>\AppData\Local\Microsoft\Windows\INetCache\Content.MSO