The web password is a new security enhancement in Duplicati. It is required to have a password for the WebUI now. You can read about how to set/re-set it here:
I am a little confused as to what version you have installed currently? The error message “The database appears to be encrypted, but no key was specified” is in the latest version of Duplicati v2.0.9.105 and newer).
If you downgraded to, say 2.0.8.1, that error message is not there, but it will instead report a database version mismatch.
Did you perhaps happen to install version 2.0.9.105 which had a faulty encryption mechanism? If that is the case, you need to install 2.0.9.105, disable database encryption, and then upgrade.
The process is described in the release notes for 2.0.9.106:
Note: the database encryption key and the webUI access password are two different passwords. The database encryption key is not mandatory, but the UI password is manadatory.