An interesting error. I've only seen it once and that was due to a braindead epub editor I was testing which placed encryption.xml in the root of the epub zip file (along with every other file except for container.xml which was in the META-INF directory).
If they are referring to the manifest section of content.opf, a file in the META-INF directory should not be listed there. If they are referring to the optional manifest.xml file which would be located in the META-INF directory, it is optional and I have never seen it used.
OTOH, unless your epub used either encryption or obfuscated fonts, you should not need the encryption.xml file present. You might want to extract it from your epub (use your favourite unzipper) and take a look at it.
The next bit is a sample encryption.xml from an epub with obfuscated fonts:
Code:
<?xml version="1.0" encoding="UTF-8"?>
<encryption xmlns="urn:oasis:names:tc:opendocument:xmlns:container" xmlns:enc="http://www.w3.org/2001/04/xmlenc#">
<enc:EncryptedData>
<enc:EncryptionMethod Algorithm="http://ns.adobe.com/pdf/enc#RC"/>
<enc:CipherData>
<enc:CipherReference URI="OEBPS/Fonts/font0029A.ttf"/>
</enc:CipherData>
</enc:EncryptedData>
<enc:EncryptedData>
<enc:EncryptionMethod Algorithm="http://ns.adobe.com/pdf/enc#RC"/>
<enc:CipherData>
<enc:CipherReference URI="OEBPS/Fonts/font0029B.ttf"/>
</enc:CipherData>
</enc:EncryptedData>
</encryption>