soehest is right about the fact that the data would be encrypted if your eggdrop logged it so wouldn't be readable.
however, it really should still be logging the encrypted text since it shouldn't know the difference between encrypted and non-encrypted text. so an important question is are you really saying it's not logging the encrypted text, or are you saying it's logging it but the text is all garbled.
if it's the latter, and you are using tcleggdrop_mcpsfuncs.tcl then you should be able to add your own logging code to your eggdrop. you might be able to do that by simply installing a 3rd party logging script from egghelp
and making it sure it loads below the mcpsfuncs.tcl script.