Mainly, administrators were upset over this. They were upset that the user might be able to encrypt files that the admin could not view. Personally, if an administrator cannot limit installable applications on the pc, they arent a very good admin. If the user REQUIRES admin privellages, then make sure they understand the software policy and what is/isnt allowed.
I honestly dont see the issue here being that there is already EFS which has existed since Win2K. The only difference here is that this program makes the folder password protected (which can be said the same for EFS if you are using multiple user accounts).
I honestly dont see the big deal But perhaps I am not looking deep enough into it