That's right. If a node needs the private key corresponding to a wallet address for ongoing automatic activities, such as mining, then you cannot use encryptwallet, because that prevents the node from accessing the key when it needs it. This is explain on the API page:
In a permissioned blockchain, MultiChain will also require the wallet to be unlocked before it can connect to other nodes, or sign blocks that it has mined.
As for the character limit in the description, we can see this problem and will look into it – thanks for letting us know.