Greetings laurawildcat,
Thanks for visiting the Apple Support Communities! I understand you're unable to update your Apple ID settings with your iMac and iPhone as expected. Further, you're curious what happens if you select the option to reset your encrypted data.
The following guide provides information on what's included in end-to-end encrypted data:
iCloud security overview
Specifically, the following section mentions the end-to-end encrypted data which would reset:
End-to-end encryption provides the highest level of data security. Your data is protected with a key derived from information unique to your device, combined with your device passcode, which only you know. No one else can access or read this data.
These features and their data are transmitted and stored in iCloud using end-to-end encryption:
- Home data
- Health data
- iCloud Keychain (includes all of your saved accounts and passwords)
- Payment information
- Siri information
- Wi-Fi network information
To use end-to-end encryption, you must have two-factor authentication turned on for your Apple ID. To access your data on a new device, you might have to enter the passcode for an existing or former device.
Messages in iCloud also uses end-to-end encryption. If you have iCloud Backup turned on, your backup includes a copy of the key protecting your Messages. This ensures you can recover your Messages if you lose access to iCloud Keychain and your trusted devices. When you turn off iCloud Backup, a new key is generated on your device to protect future messages and isn't stored by Apple.
Since you mentioned you have changed your Apple ID password, I suggest ensuring you've updated your password with any Apple services that you're using:
What to do after you change your Apple ID or password
If the issue persists, I suggest contacting Apple for further assistance:
Contact Apple Support
Kind regards.
