I figured Palmer encrypted the file to make sure that if something happened to him, the right people (Jack) would look at that file, and soon. He used flank-2 encryption.
Also, when you encrypt it with a Simple Cipher, it makes it pretty easy to break open in… say… the 10 minutes or less that it took Jack. Wouldn’t want to bother with that 128-bit key. No no… 16 bits should be enough…
What would be interesting would be if in season 6, at the end, we find out that Jack has secretly been setting all these plots into motion just so he’ll have something to do.
Or he wakes up and realizes that it’s all been one really intense dream and that he really owns an inn in vermont and writes books like “How to build a barbeque” for a living.