Is both server have same iDRAC and PERC FW version? Can you update latest FW (If not latest) and try the same. You can also reboot the server and check whether that fixes the issue

@DELL-Shine KI just realized I placed the red rectangular box over the wrong section when it comes to the encryption part. I think you understood my question either way so thank you.

I just tried rebooting both servers and making sure no updates were pending but the issue remains. I actually booted into the BIOS and compared side by side both configurations and disks and the only thing different are the serial numbers (which only varies slightly) so I am sure they are the same disks.

 Can you share iDRAC, BIOS and PERC Controller FW version installed on the server on both server. You can also swap the drive between servers (if possible) and see whether the behaviors follow the drive or server.

@DELL-Shine KI had to reinstall the OS on these two machines over the weekend and somehow the issue resolved itself. They are both now showing "Encryption Capable" for the security status.

Thanks for your help and quick replies.