An earlier version allowed users to create watchonly wallets (wallets without private keys) that were “encrypted”. Such wallets would have a stored encryption keys, but nothing would actually be encrypted with them. This can cause unexpected behavior such as https://github.com/bitcoin-core/gui/issues/772.
We can detect such wallets as they will have the disable private keys flag set, no encrypted keys, and encryption keys. For such wallets, we can remove those encryption keys thereby avoiding any issues that may result from this unexpected situation.