Finally ran across something. This one is squarely Microsoft's fault:
http://forums.microsoft.com/msdn/ShowPost.aspx?postid=1144680&siteid=1

>This problem has come out of nowhere.
>
>Suddenly, the Windows Script Encoder provided by Microsoft now produces output that won't run. For example, ASP code written in VBScript that you want to lightly encrypt with the encoder. What's so bizarre is that the corrupt output is from the same ASP source files that are unchanged and previously worked great. Now comment lines in code (before the **Start Encode** directive) are no longer preserved, and now all characters in such comment lines are converted to binary zeros.
>
>Here are two things that have changed since the last valid encoding was done in December (this is a very large ASP app containing many files, some as large as 200K). The last app build was December 2006.
>- The year has changed from 2006 to 2007
>- IE7 has been installed on the development machine.
>
>Have already re-downloaded the SCRENC.EXE utility from MSFT just in case, but this made no difference.
>
>Something has changed in a weird, weird way.
>Does anybody have any ideas? Thanks very much.