The grayed out Encrypt checkbox can happen if you have a profile setup on your iOS device which has custom restrictions. In that situation, you will be unable to disable encryption and uncheck the Encrypt box.
To see if you have any profiles setup, just tap Settings > General, and if you see a menu option for Profile, then there is one setup on your device which may be preventing you from unchecking the Encrypt checkbox. These profiles are usually setup for corporate or school devices and can also happen if you have a Microsoft Exchange account setup on your device.
Our developers are working on making iExplorer 3 compatible with encrypted backups, but even then, you would need to be able to enter the encryption password in order to access the data, and usually when a profile is setup, the encryption password is not made public to the user.
You’ll still be able to access most data in iExplorer in this situation since that backup setting only matters for data in the Backups section of iExplorer. All other sections of iExplorer are a direct connection to your device’s data and don’t require an iTunes backup