What do you mean, encryption? They didn't encrypt anything, they stored a file and gave it a filename!
It wasn't a complicated filename, either. It was probably as obvious as they could make it. They just weren't capable of much thought at that point, couldn't emulate human thinking, and fucked it up royally.
The need to have two people input it is probably another sign of their failing thought processes... They never did pretend they understood humans, hence their kidnap plan instead of mere plea for help. But they could have used Minuet or other expert program as their interface...
There had to be SOMETHING else they could've tried.
Depends on what they hoped to achieve, I guess. At that point, they still thought the ship was going to blow up. Their concern was of getting Picard and Riker off the ship somehow before that happened; if they could not be found by remote means, sending a search party would be a foolhardy maneuver, probably only leading to further casualties.
Stopping an escaping starship could have been achieved by various means. But the idea that the E-D was escaping should not have occurred to our heroes at that point yet.