Update: this was simply a lack of enforcement, and was worked out with support.
I am new to EPO and FRP (v5.0.9) and have a freshly installed EPO(v5.10). I am in testing and have two policies set up. One "enforced encryption (with offsite)" and seems to work exactly like I would expect. The other is "allow encryption (with offsite)" and this one does not provide any context menu or other options to encrypt the drive. The agent says the removable media policy is "allow unprotected access (report)" which would correspond with the first removable media option, not the items that is checked in the policy. Is this a bug or am I doing something wrong? I have ensured that the agent is up to date, uninstalled, reinstalled, rebooted, etc.