I've enabled encryption for all USB devices (Entire removable device
encryption and User defined password)

Everything appears to be working correct as I can decrypt the entire USB
key from a managed PC and extract data from the encrypted folder on an
unmanaged PC using the decryption utility.

My only concern is that I cannot see a way to re-encrypt data that has
been extracted on an unmanaged PC.
Is this correct?

If this is true it's quite a big issue as users are unable to work on
data at home and safely encrypt the data to be brought back into the